Want Cheaper Rent? End Rent Control

Want Cheaper Rent? End Rent Control

The Supreme Court may have a chance this year to determine whether rent control is constitutional or whether it represents a “taking” without just compensation. A topic worthy of debate—but in my view, there are sound economic reasons rent control (like many government regulations), however well intentioned, is woefully misguided. To see why, let’s return briefly to Economics 101.

Anyone who took an economics class will likely have (possibly painful) flashbacks in examining Exhibit 1, which shows a generic supply and demand graph, with price and quantity on the x- and y-axes, respectively. Basic economic theory expects a supply curve to slope upward because the higher the price a good’s provider can obtain, the more he’s willing to supply. On the flip side, demand for most goods is downward sloping because, on average, consumers are less-inclined to consume higher quantities of a good the more it costs. The intersection of the two determines the price and quantity the market supports (commonly known as equilibrium).

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