Week 14 Discussion: Rent Controls and Market Failures

Prior to completing this exercise, be sure you have done the following:

1. Read the article: Do Rent Controls Work? (PDF)Article: Do Rent Controls Work? (PDF) - Alternative Formats
2. Watched the videoPrice Controls, Subsidies, and the Risks of Good Intentions

Rent controls are laws that place a price ceiling (or maximum price) on what landlords are able to charge their tenants in a particular city. Although it certainly sounds wonderful to pay less for an apartment, by their very definition rent controls are inefficient and lead to market failure.

In your discussion response, address the following:

• Why are rent controls inefficient?
• What is the market failure that occurs when rent controls are imposed?
• Put economic theory aside for a moment. Do you think that cities such as New York Cityshouldutilize rent controls? Why or why not?

Be sure to end your post with a reflective and thoughtful question. (Ex. Does the government have any influence on rent prices in your city? Why do you think this is the case?)

In response to at least 2 of your classmates, respond to their posted question. Do you have any insight and other approaches to thinking about their decision-making process? How does Scarcity play into what they have described?

Submit your initial response byThursday at 11:59 PM ETand respond to at least two classmates bySunday at 11:59 PM ET.

You will be graded using the ECON1002 Discussion Rubric.docxECON1002 Discussion Rubric.docx - Alternative Formats