Rent Control,A Costly Redistributive Device? The Case of Canberra*

This paper assesses the consequences of compulsory rent and eviction control which was imposed in Canberra in 1973. A partial equilibrium model is utilized, but the effects of rent control on related markets are also considered. Two ways of estimating market rent are scrutinized, one of which is utilized in an attempt to measure tenants' benefits from the policy. A Hicks' equivalent variation measure of ‘tenants’ surplus' is proposed which takes account of the quantity constraint associated with rent control. This is estimated assuming a Cobb-Douglas utility function. The extent of the costs associated with conferring these benefits is indicated.