Spatial Misallocation and Rent Controls
AEA Papers and Proceedings
vol. 109,
May 2019
(pp. 389-92)
Abstract
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.Citation
Chapelle, Guillaume, Etienne Wasmer, and Pierre-Henri Bono. 2019. "Spatial Misallocation and Rent Controls." AEA Papers and Proceedings, 109: 389-92. DOI: 10.1257/pandp.20191024Additional Materials
JEL Classification
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R12 Size and Spatial Distributions of Regional Economic Activity
- R13 General Equilibrium and Welfare Economic Analysis of Regional Economies
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy