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Spatial Misallocation and Rent Controls

Author

Listed:
  • Guillaume Chapelle
  • Etienne Wasmer
  • Pierre-Henri Bono

Abstract

In many global cities the rental housing market is partially regulated. We document that the Paris housing market is dual: a flexible rent sector coexists with a large controlled rent sector. The two sectors have very different rent gradients towards the center of the agglomeration. We develop a model explicitly accounting for these features which allows to investigate general equilibrium effects of rent controls at the city level. In this framework the coexistence of a controlled and flexible rent sector increases the spatial misallocation of households. This mismatch can generally be alleviated by an improvement in urban transport infrastructures.

Suggested Citation

  • Guillaume Chapelle & Etienne Wasmer & Pierre-Henri Bono, 2019. "Spatial Misallocation and Rent Controls," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 389-392, May.
    • Handle: RePEc:aea:apandp:v:109:y:2019:p:389-92
    Note: DOI: 10.1257/pandp.20191024
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    Citations

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    Cited by:

    1. Ulrich B. Morawetz & H. Allen Klaiber, 2022. "Does housing policy impact income sorting near urban amenities? Evidence from Vienna, Austria," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(2), pages 411-454, October.
    2. Chen, Ruoyu & Jiang, Hanchen & Quintero, Luis E., 2023. "Measuring the value of rent stabilization and understanding its implications for racial inequality: Evidence from New York City," Regional Science and Urban Economics, Elsevier, vol. 103(C).
    3. H. Allen Klaiber & Ulrich B. Morawetz, 2021. "The Welfare Impacts of Large Urban Noise Reductions: Implications from Household Sorting in Vienna," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 121-146, January.
    4. Baye, Vera & Dinger, Valeriya, 2022. "Investment Incentives of Rent Controls and Gentrification - Evidence from German Micro Data," VfS Annual Conference 2022 (Basel): Big Data in Economics 264120, Verein für Socialpolitik / German Economic Association.
    5. Benoît Schmutz & Modibo Sidibé, 2021. "Search and Zipf: A model of Frictional Spatial Equilibrium," Working Papers 2021-01, Center for Research in Economics and Statistics.

    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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