Assess the impact of re-introducing rent control on the market for housing - Coursework Example

There are cases when the owners build the houses in order to offer these in rents to the individuals so as to meet the increasing demand for housing (Besanko and Braeutigam, 2013). The owners fix the rent for the houses in order to earn some profit but there is a concept of rent control that imposes a ceiling on the rent in cases when the owners charge an exceptionally high rent (Besanko and Braeutigam, 2013). Hence, the paper aims at carrying out a study on the market structure of the housing market and the impacts of the policies adopted for rent control.

The paper also offers a scope to understand the microeconomic theory related to the rent control. The structure of the housing market is based on the model that considers various aspects such as the availability of cheap credit that in turn increases the demand for houses in the international market (Glaeser and Luttmer, 2003). As a result, there is a relative price of the houses due to low availability of the houses. However, there was a high availability of low quality houses which forced the investors to raise the prices of the houses in order to earn high profit.

These features are essential for the Life-Cycle model of Housing where the prices of houses match with the quality of the houses available in the international market (Krugman and Wells, 2012). On the contrary, the characteristics of the buyers willing to purchase the houses differ based on the age, wealth and income they earn. In order to bring in equilibrium within the market, the prices of the houses are equalized with the quality of the available houses and also it is based on the demand and supply aspects in the housing market.

Thus, the study suggests that the distribution of the houses depends on the numbers of buyers as well as the quality of houses available in the market. Further, the suitability of the available houses to the buyers is also an essential factor that increases the number of buyers willing to