NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Misallocation of Housing Under Rent Control

Edward L. Glaeser, Erzo F. P. Luttmer

NBER Working Paper No. 6220
Issued in October 1997
NBER Program(s):   PE

When there are binding price controls, there are shortages and the allocation of goods across consumers may not be efficient. In general, the misallocation costs of price controls are first order, while the classic welfare losses due to undersupply are second order. This paper presents an empirical methodology for estimating the degree of misallocation of housing units due to rent control in New York City. This methodology involves comparing the relative consumption of different demographic groups within the rent controlled area with the relative levels of consumption in a free market area. Our best estimate of the costs of rent control in New York due to the misallocation of rental apartments is 200 dollars per apartment annually.

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Document Object Identifier (DOI): 10.3386/w6220

Published: Glaeser, Edward L. and Erzo F. P. Luttmer. "The Misallocation Of Housing Under Rent Control," American Economic Review, 2003, v93(4,Sep), 1027-1046.

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