No one likes to pay rent. Yet scarcities of land and urban housing often cause rents to soar in cities. In response to rising rents and hostility toward landlords, governments sometimes impose rent control, s. These generally limit the increases on rent to a small year-to year increase and can leave controlled rents far below free-market rents.
a. Redraw Figure 4-13 to illustrate the impact of rent controls for apartments.
b. What will be the effect of rent controls on the vacancy rate of apartments?
c. What non-rent options might arise as a substitute for the higher rents?
d. Explain the words of a European critic of rent controls: "Except for bombing, nothing is as efficient at destroying a city as rent controls."