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Rent control, mismatch costs and search efficiency

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  • Arnott, Richard
  • Igarashi, Masahiro

Abstract

In the discursive literature on rent control, it has been argued that rent controls cause the rental housing market to become "tighter" -- the vacancy rate falls, search costs rise, and tenants become less well-matched with housing units-but at the same time restrict landlords’ ability to exploit their market power in setting rents. Such phenomena are excluded by assumption in competitive models of the renting housing market. This paper applies a monopolistically competitive model of the rental housing market developed by Igarashi to explore these events. In the model, moderate rent controls are welfare-improving, but severe controls are harmful.
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  • Arnott, Richard & Igarashi, Masahiro, 2000. "Rent control, mismatch costs and search efficiency," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 249-288, May.
    • Handle: RePEc:eee:regeco:v:30:y:2000:i:3:p:249-288
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    7. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-1292, December.
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