Title: Price Ceilings: Rent Controls| Microeconomics Videos
Headings: Price Ceilings: Rent Controls
Price Ceilings: Rent Controls
Content: Indeed, when rent controls are very strong, serviceable apartment buildings quickly turn into slums, and slums turn into abandoned and hollowed-out buildings. This happened in New York City, this happened in Paris, this happened in many cities around the world, which instituted strong rent controls. Rent controls create wasteful lines and other search costs. So, finding an apartment in New York City often takes a long time and you have to spend a lot of money to get a rent-controlled apartment. In one famous example, episode of Seinfeld, George looks for apartments by consulting the obituaries and rushing to the landlord anytime he sees someone who died who had a nice apartment. And that's in fact one of the techniques, which New Yorkers use to try and get a rent-controlled apartment. Another effect of rent controls is to increase discrimination because rent controls reduce the price of discrimination. In a free market, landlords might discriminate. But then, they pay a price because it's going to take them longer to rent out the apartment. But, precisely because the rent control makes the quantity demanded exceed the quantity supplied, there are more people lining up to get apartments than there are apartments.