Érudit | Dépôt de documents >
CIRPÉE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi >
Cahiers de recherche du CIRPÉE >

Please use this identifier to cite or link to this item:

Title: Equilibrium Excess Demand in the Rental Housing Market (Revised)
Authors: Cuff, Katherine
Marceau, Nicolas
Keywords: Tenancy Default
Excess Demand
Rental Housing Policies
Issue Date: 2008-04
Series/Report no.: Cahiers du CIRPÉE;07-44
Abstract: We develop a model of a competitive rental housing market with endogenous default due to income uncertainty. There is a large number of identical, potential suppliers who each face a fixed cost of entering the rental housing market. Those suppliers who choose to enter decide how many rental units to supply and the rental price to charge. Potential tenants who differ in their income and face an uninsurable income shock choose whether to engage in a costly search for rental housing. If they find a rental unit, then they must commit to a rental agreement before the income uncertainty is resolved. Consequently, some tenants may default on their rental payments. We show that tenancy default can explain persistent excess demand in the rental housing market without any government price regulations. With excess demand in equilibrium, some individuals are simply unable to find rental housing. We study both government regulations affecting the cost of default to the housing suppliers and the quality of rental units, and the imposition of rent control. We show that rent control can have non-standard effects on the access to rental housing and on welfare.
Appears in Collections:Cahiers de recherche du CIRPÉE

Files in This Item:

CIRPEE07-44.pdf, (Adobe PDF ; 229.21 kB)

Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.


About Érudit | Subscriptions | RSS | Terms of Use | Contact us |

Consortium Érudit ©  2016