On aspect of rent control is that it incentives people to invest into the flats that they rent because they can expect that the landlord doesn’t simply raise the prices to drive them out of the flat and makes their investment void.
There’s also an imbalance because for a tenant it’s more costly to change move between flats then it is for a landlord to change tenants. Then imbalance can be used to extract higher rents then could be extrated in the absence of switching costs.
A good economic analysis should compare that value against the reduced motivation to create more supply. It might still be that the reduced motivations to create more supply is more important, but it’s not a slamdunk.
Thanks for the concrete examples! Do you have relevant references for these at hand? I could imagine that there might be better ways to solve these issues, or that they somehow mostly cancel out or relatively low problems, so I’m interested to see relevant arguments and case studies.
On aspect of rent control is that it incentives people to invest into the flats that they rent because they can expect that the landlord doesn’t simply raise the prices to drive them out of the flat and makes their investment void.
There’s also an imbalance because for a tenant it’s more costly to change move between flats then it is for a landlord to change tenants. Then imbalance can be used to extract higher rents then could be extrated in the absence of switching costs.
A good economic analysis should compare that value against the reduced motivation to create more supply. It might still be that the reduced motivations to create more supply is more important, but it’s not a slamdunk.
Thanks for the concrete examples! Do you have relevant references for these at hand? I could imagine that there might be better ways to solve these issues, or that they somehow mostly cancel out or relatively low problems, so I’m interested to see relevant arguments and case studies.
I haven’t read through the economics literature on rent control myself, the above is just from internet and meatspace policy discussions.
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