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The Impact Of Rent Controls In Non‐Walrasian Markets: An Agent‐Based Modeling Approach

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  • Ralph Bradburd
  • Stephen Sheppard
  • Joseph Bergeron
  • Eric Engler

Abstract

ABSTRACT We use agent‐based models to consider rent ceilings in non‐Walrasian housing markets, where bargaining between landlord and tenant leads to exchange at a range of prices. In the non‐Walrasian setting agents who would be extramarginal in the Walrasian setting frequently are successful in renting, and actually account for a significant share of the units rented. This has several implications. First, rent ceilings above the Walrasian equilibrium price (WEP) can affect the market outcome. Second, rent ceilings that reduce the number of units rented do not necessarily reduce total market surplus. Finally, the distributional impact of rent controls differs from the Walrasian setting.

Suggested Citation

  • Ralph Bradburd & Stephen Sheppard & Joseph Bergeron & Eric Engler, 2006. "The Impact Of Rent Controls In Non‐Walrasian Markets: An Agent‐Based Modeling Approach," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 455-491, August.
    • Handle: RePEc:bla:jregsc:v:46:y:2006:i:3:p:455-491
    DOI: 10.1111/j.1467-9787.2006.00481.x
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    References listed on IDEAS

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    1. Gode, Dhananjay (Dan) K. & Sunder, Shyam, 2004. "Double auction dynamics: structural effects of non-binding price controls," Journal of Economic Dynamics and Control, Elsevier, vol. 28(9), pages 1707-1731, July.
    2. Rauh, Michael T., 2004. "Wage and price controls in the equilibrium sequential search model," European Economic Review, Elsevier, vol. 48(6), pages 1287-1300, December.
    3. 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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    Cited by:

    1. John Mc Breen & Florence Goffette-Nagot & Pablo Jensen, 2011. "Information and Search on the Housing Market: An Agent-based Model," ERSA conference papers ersa11p1395, European Regional Science Association.
    2. Robert Axtell, 2007. "What economic agents do: How cognition and interaction lead to emergence and complexity," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 20(2), pages 105-122, September.

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