Many student government candidates at colleges and universities propose rent controls on local rental housing as a way to help students afford rental housing. Economic theory suggests that this policy would harm students as a whole despite the fact that some students who are able to find housing at the reduced price would benefit. Which of the following are some of the offsetting secondary effects of the rent controls that would work to the disadvantage of students?

Question

Quizplus · Accepted Answer

Rent controls create a shortage of rental housing as landlords cannot make enough profit to justify their investment in creating new rental units or maintaining existing ones. This leads to a reduction in the quality of available rental housing as landlords cannot afford to maintain and upgrade their properties. Finally, the reduction in profits discourages developers from building new rental units, which leads to a reduction in the future supply of rental housing. All of these secondary effects work to the disadvantage of students who are seeking affordable and high-quality rental housing.

Many Student Government Candidates at Colleges and Universities Propose Rent