Rent Control Evasion: Effects on Income and Deadweight Loss

When ability to avoid rent control is randomly distributed over landlords, housing may rise above its free market level. Landlords evading part of rent-control are like suppliers selling to a perfectly price-discriminating monopsonist. A continuum of evasive abilities gives a range of low rent landlords, charging different prices and to whom tenants flock. High housing supply comes at the expense of deadweight loss due to adverse selection of landlords with high costs and good evasive abilities.Rent-control produces an equilibrium {\em range} of rents and raises what some tenants pay above that which they would pay in an unregulated market.