a city council member representing a low-income neighbourhood with an older housing stock is concerned about gentrification displacing local residents. He notices that many new buildings are being constructed on vacant land in the neighbourhood. In order to prevent displacement, the council member is considering proposing a new ordinance that bans new housing construction in the neighbourhood.

a. How would such a proposal likely affect neighborhood rents?

b. An aide convinces the council member to propose rent regulation instead, which will restrict rent growthon all existing housing units to be no more than 1% per year until a tenant moves out. What are the likely consequences of rents in the neighbourhood?

c. Who is likely to benefit from such a proposal and who might be harmed?