AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Spatial Misallocation and Rent Controls
AEA Papers and Proceedings
vol. 109,
May 2019
(pp. 389–92)
Abstract
In many global cities the rental housing market is partially regulated. We document that the Paris housing market is dual: a flexible rent sector coexists with a large controlled rent sector. The two sectors have very different rent gradients towards the center of the agglomeration. We develop a model explicitly accounting for these features which allows to investigate general equilibrium effects of rent controls at the city level. In this framework the coexistence of a controlled and flexible rent sector increases the spatial misallocation of households. This mismatch can generally be alleviated by an improvement in urban transport infrastructures.Citation
Chapelle, Guillaume, Etienne Wasmer, and Pierre-Henri Bono. 2019. "Spatial Misallocation and Rent Controls." AEA Papers and Proceedings, 109: 389–92. DOI: 10.1257/pandp.20191024Additional Materials
JEL Classification
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R12 Size and Spatial Distributions of Regional Economic Activity
- R13 General Equilibrium and Welfare Economic Analysis of Regional Economies
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy