Spatial Misallocation and Rent Controls

Spatial Misallocation and Rent Controls

In many global cities the rental housing market is partially regulated. We document that the Paris housing market is dual: a flexible rent sector coexists with a large controlled rent sector. The two sectors have very different rent gradients towards the center of the agglomeration. We develop a model explicitly accounting for these features which allows to investigate general equilibrium effects of rent controls at the city level. In this framework the coexistence of a controlled and flexible rent sector increases the spatial misallocation of households. This mismatch can generally be alleviated by an improvement in urban transport infrastructures.

Guillaume Chapelle, Etienne Wasmer and Pierre-Henri Bono

AEA Papers and Proceedings

May 2019

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By |2019-05-24T07:16:11-07:00May 24th, 2019|Affordability, Efficiency/Growth, Land Use Regulation, Reference|