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Question in rent control
Some 200 American cities have rent controls designed to protect residents from high housing prices. When city governments back the price of rental housing below the equilibrium price level, the amount of housing demanded by consumers exceeds the amount that landlords are willing to make available. Answer the following questions:
What will the black market look like?What are some of the clever strategies that landlords might use to create a black market?How will the price ceiling effect the future supply of rental houses?What will happen to the quality of rental housing?Explain how the price system normally works to facilitate an efficient rationing of apartments.What is the difference between price rationing and non-price rationing?What non-price methods of rationing will landlords use to discern whom they should rent to?How will efficiency and convenience be affected?What will it be like for renters to move to other locations that are more convenient for work or family?Who benefits the most from rent control, long-term renters, or newcomers?In light of this discussion, what policies would you propose to promote affordable housing?
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