In cities with rent control, why doesn’t it work overall to actually lower the price of housing?
In: Economics
Generally, when prices increase on something, it provides more incentive for people to provide more of that thing. If rents go up a lot, there’s incentive to invest in building more housing. If I have a spare room, there’s more incentive to rent it out. With price controls, it removes that incentive to increase supply. There are some pros to the idea; it does prevent people from ending up on the street because they can no longer afford the place they were already living. But there’s a cost to everything.
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