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Rent Control The Basis For Essay

This is because a) these people vote and b) sometimes these people are the current occupants and may be out of the economy -- seniors especially. Thus, while some people can afford rent increases others cannot. A politician seen as throwing octogenarian widows onto the street is going to have trouble getting elected. Thus, we have the introduction of rent controls because natural market outcomes are socially undesirable. 3.

Where I am from, the market controls the rents that people pay, for the most part. There are no rent controls, but there are limits on how much the rent can be increased in a given year without significant renovations. Even this seemingly minor law distorts the market. The first is that landlords often raise the rent by the maximum each year, knowing that they cannot "bank" such increases for later. So the control locks in the annual increase for renters every year. Also, landlords have incentive to renovate apartments. This increases the quality of the stock, but it also decreases the amount...

This rule is like rent controls that way -- it does not decrease inequality of outcomes in the market, it simply redistributes the inequality of outcomes by creating different winners and different losers than would otherwise exist. And octogenarians are still forced out by increases when they cannot increase their income to match the rent increase. The market has the benefit of always attracting new people, and new money, so the outcomes are oriented in this way, but it is debatable whether rents are actually lower as the result of these policies or higher. Certainly, they are not particularly effective at stopping market forces, but the politicians like to appear to stand on the side of the working man or the senior citizen, so the optics are better even if the economic reality is not.
Works Cited:

Investopedia. (2013). Definition of deadweight loss. Investopedia. Retrieved May 3, 2013 from http://www.investopedia.com/terms/d/deadweightloss.asp

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Investopedia. (2013). Definition of deadweight loss. Investopedia. Retrieved May 3, 2013 from http://www.investopedia.com/terms/d/deadweightloss.asp
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