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In 2008, Airbnb launched itself as service to match hosts and guests for short-term rental stays in private homes or apartments. The service significantly expanded

In 2008, Airbnb launched itself as service to match hosts and guests for short-term rental stays in private homes or apartments. The service significantly expanded the supply of tourist housing. In 2019, the city of New Orleans tightened its short-term rental rules to forbid whole-home listings in historical residential neighborhoods, including the French Quarter and Garden District. Suppose this restriction is viewed as a production quota. Also, assume that the demand curve for short-term rentals is relatively steeper than supply curve for short-term rentals. In no more than four sentences, describe what happens in the short run to the price of short-term rentals, consumer welfare, and producer welfare as a result of this quota. Additionally, in no more than two additional sentences, justify why you would keep or eliminate this quota. (on economic grounds only).

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