Rent stabilization and the long-run supply of housing

This study contributes to the understanding of how the construction and replacement of urban housing may be affected by rent stabilization. One of the primary insights is that neither the timing nor the density of development will be affected by rent stabilization because allowing perfectly flexible base rents permits landlords to capture all of the advantages of a rent growth control. However, redevelopment is hastened because rent stabilization complemented by vacancy decontrol increases the difference between rents before and after redevelopment, increasing the opportunity costs of postponing redevelopment. Extensions include an analysis of other common rent regulations and the impact of rent stabilization on the urban rent gradient.