The Effect of Rent Controls along the 'Excess' Price Distribution

Joan Monrà S and José García-Montalvo
Authors registered in the RePEc Author Service: Joan Monras

No 1345, Working Papers from Barcelona School of Economics

Abstract: Catalonia enacted a rental cap policy that affected only some municipalities and, within those, only units with prices above their "reference" price. We show that, as intended, the policy led to a reduction in rental prices, but with price increases at the bottom and price declines at the top of the distribution. The policy also affected supply, with exit at the top which was not compensated by entry at the bottom. We show that a model with quality differences in rental units rationalizes the empirical facts and allows us to compute the welfare consequences of an (increasingly popular) policy that was designed as a short-term remedy to a tight rental market.

Keywords: rent control; housing supply; rental markets (search for similar items in EconPapers)
JEL-codes: D4 R21 R28 R31 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-eur, nep-reg and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1345

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