The Impact of Rent Controls in Non-Walrasian Markets: An Agent-Based Modeling Approach

37 Pages Posted: 7 Jan 2007

See all articles by Ralph Bradburd

Ralph Bradburd

Williams College - Department of Economics

Stephen C. Sheppard

Williams College

Joseph Bergeron

Williams College - Department of Economics

Eric Engler

Williams College - Department of Economics

Abstract

We use agent-based models to consider rent ceilings in non-Walrasian housing markets, where bargaining between landlord and tenant leads to exchange at a range of prices. In the non-Walrasian setting agents who would be extramarginal in the Walrasian setting frequently are successful in renting, and actually account for a significant share of the units rented. This has several implications. First, rent ceilings above the Walrasian equilibrium price (WEP) can affect the market outcome. Second, rent ceilings that reduce the number of units rented do not necessarily reduce total market surplus. Finally, the distributional impact of rent controls differs from the Walrasian setting.

Suggested Citation

Bradburd, Ralph and Sheppard, Stephen C. and Bergeron, Joseph and Engler, Eric, The Impact of Rent Controls in Non-Walrasian Markets: An Agent-Based Modeling Approach. Journal of Regional Science, Vol. 46, No. 3, pp. 455-491, August 2006. Available at SSRN: https://ssrn.com/abstract=918613 or http://dx.doi.org/10.1111/j.1467-9787.2006.00481.x

Ralph Bradburd (Contact Author)

Williams College - Department of Economics ( email )

Fernald House
Williamstown, MA 01267
United States

Stephen C. Sheppard

Williams College ( email )

Williamstown, MA 01267
United States

Joseph Bergeron

Williams College - Department of Economics

Fernald House
Williamstown, MA 01267
United States

Eric Engler

Williams College - Department of Economics

Fernald House
Williamstown, MA 01267
United States

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