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Rent Control Evasion: Effects on Income and Deadweight Loss

Author

Listed:
  • Filip Palda

    (Ecole nationale d'administration publique in Montreal)

Abstract

When ability to avoid rent control is randomly distributed over landlords, housing may rise above its free market level. Landlords evading part of rent-control are like suppliers selling to a perfectly price-discriminating monopsonist. A continuum of evasive abilities gives a range of low rent landlords, charging different prices and to whom tenants flock. High housing supply comes at the expense of deadweight loss due to adverse selection of landlords with high costs and good evasive abilities.Rent-control produces an equilibrium {\em range} of rents and raises what some tenants pay above that which they would pay in an unregulated market.

Suggested Citation

  • Filip Palda, 2001. "Rent Control Evasion: Effects on Income and Deadweight Loss," Urban/Regional 0112001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpur:0112001
    Note: Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript; pages: 38; figures: included. PDF document may be viewed or printed.
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    References listed on IDEAS

    as
    1. Raymon, Neil, 1983. "Price ceilings in competitive markets with variable quality," Journal of Public Economics, Elsevier, vol. 22(2), pages 257-264, November.
    2. Edward L. Glaeser & Erzo F. P. Luttmer, 2003. "The Misallocation of Housing Under Rent Control," American Economic Review, American Economic Association, vol. 93(4), pages 1027-1046, September.
    3. Gyourko, Joseph & Linneman, Peter, 1989. "Equity and efficiency aspects of rent control: An empirical study of New York City," Journal of Urban Economics, Elsevier, vol. 26(1), pages 54-74, July.
    4. Richard Arnott & Russell Davidson & David Pines, 1983. "Housing Quality, Maintenance and Rehabilitation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(3), pages 467-494.
    5. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
    6. repec:bla:scandj:v:87:y:1985:i:3:p:500-520 is not listed on IDEAS
    7. 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..
    8. Browning, Edgar K & Culbertson, William Patton, Jr, 1974. "A Theory of Black Markets under Price Control: Competition and Monopoly," Economic Inquiry, Western Economic Association International, vol. 12(2), pages 175-189, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    rent control; informal sector; deadweight loss;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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