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The way rent control works is certainly designed to help those in need but instead it creates a artificial demand for affordable housing. I am having trouble w

by dfc 15y ago

The way rent control works is certainly designed to help those in need but instead it creates a artificial demand for affordable housing. I am having trouble wrapping my head around this quote. How could this be? Do you mean supply? There is always more demand for a good at lower prices than higher prices. If you took rent control away poor people would still want to live in nice places and pay low rent.

benmccann 15y ago
From the Wikipedia article on price ceilings: "A price ceiling set below the free-market price has several effects. Suppliers find they can't charge what they had been. As a result, some suppliers drop out of the market. This reduces supply. Meanwhile, consumers find they can now buy the product for less, so quantity demanded increases. These two actions cause quantity demanded to exceed quantity supplied, which causes a shortage" Price ceilings are monumentally stupid. Unfortunately, the government rarely seems to be run by people who have much of an economic education.
- dfc 15y ago
  I still take issue with the argument and I had trouble finding the citation for this statement or the graphs. Under the price ceiling there is excess demand relative to the supply. This is a no brainer. But excess demand is not the same thing as an increase in demand. If there is an increase in demand why is the demand curve not shifted to the right? The curve stays in the same place.
  - benmccann 15y ago
    The quantity demanded is a point on the demand curve. Yes, the demand curve remains in the same place. However, the point at which it intersects the price ceiling is at a lower price and higher quantity than the natural equilibrium. If you're forced to sell something at a lower price, then there will be more people willing to buy it.
    - dfc 15y ago
      "demand curve remains in the same place" = no change in demand
      - benmccann 15y ago
        False. I'm talking about the actual quantity being demanded. You're talking about a demand function. They are two different things. I'm talking about a number like 1,500. You're talking about something like a coefficient changing in Q = a - bP. A demand curve shift does result in a change in quantity demanded. However, there are other things that can result in changes in quantity demanded as well (such as a price ceiling or technological progress resulting in lower prices). You already agreed that a price ceiling leads to excess demand. That means demand > supply. Yet, the supply curve did not shift either. Again, this is because demand is a point on the demand curve. You're confusing a graph of demand at each price with demand itself.
DanBlake 15y ago
Check these articles out for some good points http://www.cato.org/pubs/pas/pa-274.html http://www.cato.org/pubs/pas/pa-274.html http://www.nmhc.org/ResearchReport.cfm?ItemNumber=55262 http://www.nmhc.org/ResearchReport.cfm?ItemNumber=55262
- dfc 15y ago
  I apreciate the links but I wish they were from less biased sources. Any peer reviewed academic citations? Quote from NMHC: NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. Cato is obviously infinitely more reputable than an industry trade group. But lets face it Cato is not exactly an unbiased source for discussion of government policies.

by dfc 15y ago

benmccann 15y ago

From the Wikipedia article on price ceilings: "A price ceiling set below the free-market price has several effects. Suppliers find they can't charge what they had been. As a result, some suppliers drop out of the market. This reduces supply. Meanwhile, consumers find they can now buy the product for less, so quantity demanded increases. These two actions cause quantity demanded to exceed quantity supplied, which causes a shortage" Price ceilings are monumentally stupid. Unfortunately, the government rarely seems to be run by people who have much of an economic education.

dfc 15y ago
I still take issue with the argument and I had trouble finding the citation for this statement or the graphs. Under the price ceiling there is excess demand relative to the supply. This is a no brainer. But excess demand is not the same thing as an increase in demand. If there is an increase in demand why is the demand curve not shifted to the right? The curve stays in the same place.
- benmccann 15y ago
  The quantity demanded is a point on the demand curve. Yes, the demand curve remains in the same place. However, the point at which it intersects the price ceiling is at a lower price and higher quantity than the natural equilibrium. If you're forced to sell something at a lower price, then there will be more people willing to buy it.
  - dfc 15y ago
    "demand curve remains in the same place" = no change in demand
    - benmccann 15y ago
      False. I'm talking about the actual quantity being demanded. You're talking about a demand function. They are two different things. I'm talking about a number like 1,500. You're talking about something like a coefficient changing in Q = a - bP. A demand curve shift does result in a change in quantity demanded. However, there are other things that can result in changes in quantity demanded as well (such as a price ceiling or technological progress resulting in lower prices). You already agreed that a price ceiling leads to excess demand. That means demand > supply. Yet, the supply curve did not shift either. Again, this is because demand is a point on the demand curve. You're confusing a graph of demand at each price with demand itself.

DanBlake 15y ago

Check these articles out for some good points http://www.cato.org/pubs/pas/pa-274.html http://www.cato.org/pubs/pas/pa-274.html http://www.nmhc.org/ResearchReport.cfm?ItemNumber=55262 http://www.nmhc.org/ResearchReport.cfm?ItemNumber=55262

dfc 15y ago
I apreciate the links but I wish they were from less biased sources. Any peer reviewed academic citations? Quote from NMHC: NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. Cato is obviously infinitely more reputable than an industry trade group. But lets face it Cato is not exactly an unbiased source for discussion of government policies.