Rent control

IFY Economics Francis

Outline

Put
Read Define Discuss Alternatives
together

Define the Discuss the Offer

Read the
terms we are (application) problem alternatives
instruction
going to use (analysis) (evaluation)

Analysis/ Evaluation may change depending on the instruction

and background. Yet for today, that will do.
 Good Quality housing

Define Describe Describe

Merit good the information The external benefit

failure:
 Bad Quality housing

Define Describe Describe

Demerit good Information failure: because of External cost:

Bad housing: what makes it bad?
the increase in the housing price,
consumers believe that high rent
reflects the quality of the good
whereas it merely reflects a
possible capital gain for the
landlord
Implementing the
price control

• Can price control define good

and bad housing?
• Draw the effect on a maximum
price on house market
Questions to address
• If the price control is effective in some areas, will it solve the
externalities ( poor health, bad schools, noise, lack of transportations,
services, crimes, environment etc…)
• Will landlord with good properties be discourage to put up their
property for rent? It will leave only bad properties on the market
draw one Supply for each (bad and good)
• Will landlord convert their property to other uses?
• Is it really a problem of merit/demerit goods or something else?
(externalities, not really demand but just want or desire, etc…)