In New York City, 1 million apartments are subject to rent stabilization. The Rent Guidelines Board regulates changes in rents, usually limiting increases to 2.5% or less per year. Columbia Business School professor Stijn Van Nieuwerburgh estimated that, on average, a person lucky enough to secure a rent-stabilized apartment would pay 7% less than market, and after 20 years, 45% less.

a. Discuss whether the rent stabilization would cause excess demand or excess supply.

b. Using suitable demand and supply curves, illustrate the equilibrium in the market for apartment rentals.

c. How does the rent stabilization policy affect incentives to pay bribes to secure rent-stabilized apartments?

d. How would the shift to work from home affect the equilibrium in (b)?