The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Question

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In the long run, both landlords and tenants have more time to adjust their behaviors to rent control policies. Landlords may choose not to invest in new housing or to maintain existing housing, reducing supply. Tenants may increase demand due to lower prices. These adjustments lead to larger housing shortages as both supply and demand respond more elastically over time.

The Housing Shortages Caused by Rent Control Are Larger in the Long