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Department of Business and Economics, University of Southern Denmark Discussion Papers of Business and Economics
Department of Business and Economics, University of Southern Denmark

No 7/2009:
Rent control and misallocation

Gintautas Bloze () and Morten Skak ()

Abstract: The paper considers welfare effects of rent control when it is applied only in a sector of a rental housing market. In rent controlled sectors of the Danish rental housing market, we find welfare reducing overallocation of square meters between 9 and 17 per cent of actual allocations. Looking at the 20 per cent most overallocated households, the overallocation of square meters is between 42 and 92 per cent, and the estimated corresponding welfare loss ranges from 1.5 to 5.3 per cent of the average annual rent in the sectors.

Keywords: Rent control; Housing; Regulation; Price ceiling; Rationing; Allocation; (follow links to similar papers)

JEL-Codes: D11; D61; L51; R21; R31; (follow links to similar papers)

25 pages, October 15, 2009

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