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Tenancy Rent Control And Credible Commitment In Maintenance

Listed author(s):
  • Richard Arnott

    ()

    (Department of Economics, University of California Riverside)

  • Elizaveta Shevyakhova

    (Department of Economics, Boston College)

Under tenancy rent control, rents are regulated within a tenancy but not between tenancies. This paper investigates the effects of tenancy rent control on housing quality and maintenance. Since the discounted revenue received over a fixed-duration tenancy depends only on the starting rent, intuitively the landlord has an incentive to spruce up the unit between tenancies in order to "show" it well, but little incentive to maintain the unit well during the tenancy. The paper formalizes this intuition, and presents numerical examples illustrating the efficiency loss from this effect.

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File URL: http://economics.ucr.edu/papers/papers08/08-12.pdf
File Function: First version, 2008
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Paper provided by University of California at Riverside, Department of Economics in its series Working Papers with number 200812.

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Length: 27 pages
Date of creation: Sep 2008
Date of revision: Sep 2008
Handle: RePEc:ucr:wpaper:200812
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