Suppose the local government decides to implement rent controls.The housing shortage in the short run is likely to be less severe than the housing shortage in the long run.

Question

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Rent controls may lead to increased demand for rental housing in the short run, as rent prices are lower than what they would be in a free market. However, in the long run, rent controls may discourage investment in new housing and lead to a decrease in the supply of rental housing, exacerbating the housing shortage. Therefore, the housing shortage in the long run is likely to be more severe than in the short run.

Suppose the Local Government Decides to Implement Rent Controls