A mayor wants to help renters in her city. She considers two policies that will benefit renters
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A mayor wants to help renters in her city. She considers two policies that will benefit renters equally. One policy is a rent control, which places a price ceiling, p, on rents. The other is a government housing subsidy of s dollars per month that lowers the amount renters pay (to p). Who benefits and who loses from these policies? Compare the effects of the two policies on the quantity of housing consumed, consumer surplus, producer surplus, government expenditure, and dead weight loss. Does the comparison of dead weight loss depend on the elasticities of supply and demand?
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Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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