The Misallocation of Housing Under Rent Control
When there are binding price controls, there are shortages and the allocation of goods across consumers may not be efficient. In general, the misallocation costs of price controls are first order, while the classic welfare losses due to undersupply are second order. This paper presents an empirical methodology for estimating the degree of misallocation of housing units due to rent control in New York City. This methodology involves comparing the relative consumption of different demographic groups within the rent controlled area with the relative levels of consumption in a free market area. Our best estimate of the costs of rent control in New York due to the misallocation of rental apartments is 200 dollars per apartment annually.
|Date of creation:||Oct 1997|
|Date of revision:|
|Publication status:||published as Glaeser, Edward L. and Erzo F. P. Luttmer. "The Misallocation Of Housing Under Rent Control," American Economic Review, 2003, v93(4,Sep), 1027-1046.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Suen, Wing, 1989. "Rationing and Rent Dissipation in the Presence of Heterogeneous Individuals," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1384-94, December.
- Edward L. Glaeser & Erzo F. P. Luttmer, 1997.
"The Misallocation of Housing Under Rent Control,"
NBER Working Papers
6220, National Bureau of Economic Research, Inc.
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- Edward L. Glaeser, 1996.
"The Social Costs of Rent Control Revisted,"
Harvard Institute of Economic Research Working Papers
1747, Harvard - Institute of Economic Research.
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- Olsen, Edgar O, 1972. "An Econometric Analysis of Rent Control," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1081-1100, Nov.-Dec..
- Deacon, Robert T & Sonstelie, Jon, 1989. "The Welfare Costs of Rationing by Waiting," Economic Inquiry, Western Economic Association International, vol. 27(2), pages 179-96, April.
- Mark Frankena, 1975. "Alternative Models of Rent Control," Urban Studies, Urban Studies Journal Limited, vol. 12(3), pages 303-308, October.
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