Incentive Ceiling

David Henderson

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As someone who has taught economics for 28 of the last 33 years, I thought I had pretty much seen everything a student could come up with in an introductory course in which the issue was rent control. What I'm about to share is not a new concept or a new analytic result, but simply an inspired way of saying an old result.

In response to a question about rent control, one of my students, Preston Rackauskas, referred to a rent ceiling as an "incentive ceiling." Sweet.

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CATEGORIES: Price Controls

COMMENTS (4 to date)

Latest Comment

Randy writes:

That is good.

Posted November 20, 2008 10:39 AM

Zac writes:

I really don't see how this is insightful or noteworthy.

Posted November 20, 2008 5:00 PM

Mensarefugee writes:

[Comment removed pending confirmation of email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog.--Econlib Ed.]

Posted November 21, 2008 3:19 AM

jb writes:

@Zac -

A less snarky and more meaningful comment might have been: "Based on the books I've read, I've seen that phrased used before - perhaps the student has been doing some reading outside of class?"

or "I don't really think it's an "incentive ceiling" - philosophically, and based on the evidence, rent control seems to create all sorts of innovative solutions to "route around the control". That is to say, it creates incentives to look for loopholes and exploit grey areas.

[Comment edited--Econlib Ed.]

Posted November 21, 2008 11:32 AM

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