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I think overall housing supply is the primary driver. This regulation is just the sort of red tape that incompetent governments impose, fooled by rent seeking

by SRasch 9y ago

I think overall housing supply is the primary driver. This regulation is just the sort of red tape that incompetent governments impose, fooled by rent seeking interests to implement a barrier to entry to reduce competition.

autokad 9y ago
>"rent seeking interests" I agree with you to a large part, but thats exactly what a host of AirBNB is after as well (seeking rent). I dont like how people try to use it as if its a bad word.
- baby_wipe 9y ago
  "Rent-seeking" is referring to something different than literally seeking rent money. It's basically when people lobby the government to get special favors for themselves, even though it negatively impacts almost everyone else. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking It's not a very descriptive term and I see why people get confused by it.
  - pash 9y ago
    To expand on that: “Rent” is a term of art in economics that means a “payment to an owner or factor of production in excess of the costs needed to bring that factor into production” [0]. Economic theory shows that in a perfectly competitive market the price of a good equals its marginal cost of production. So prices above marginal cost demonstrate either a lack of competition in the market or other deviations from the theoretic ideal that give producers what economists call “market power”, the ability to charge higher prices for a good than they should be able to charge in a market in which many producers compete to sell more or less indistinguishable items. Financing costs and all other costs are included in this calculus, so economic “rents” (as a term of art) in the context of the rent charged on homes and other real-estate means something like “excess profits due to a dysfunctional market”; in this case the dysfunctionality of the market is largely the result of regulation that prevents local supply of housing to rise to the level of local demand. 0. https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent

by SRasch 9y ago

autokad 9y ago

>"rent seeking interests" I agree with you to a large part, but thats exactly what a host of AirBNB is after as well (seeking rent). I dont like how people try to use it as if its a bad word.

baby_wipe 9y ago
"Rent-seeking" is referring to something different than literally seeking rent money. It's basically when people lobby the government to get special favors for themselves, even though it negatively impacts almost everyone else. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking It's not a very descriptive term and I see why people get confused by it.
- pash 9y ago
  To expand on that: “Rent” is a term of art in economics that means a “payment to an owner or factor of production in excess of the costs needed to bring that factor into production” [0]. Economic theory shows that in a perfectly competitive market the price of a good equals its marginal cost of production. So prices above marginal cost demonstrate either a lack of competition in the market or other deviations from the theoretic ideal that give producers what economists call “market power”, the ability to charge higher prices for a good than they should be able to charge in a market in which many producers compete to sell more or less indistinguishable items. Financing costs and all other costs are included in this calculus, so economic “rents” (as a term of art) in the context of the rent charged on homes and other real-estate means something like “excess profits due to a dysfunctional market”; in this case the dysfunctionality of the market is largely the result of regulation that prevents local supply of housing to rise to the level of local demand. 0. https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent