George Fallis

Price Effects of Rent Control on Controlled and Uncontrolled Rental Housing in Toronto: A Hedonic Index Approach

This paper examines the price effects of rent controls with exemptions on rent controlled and non-rent controlled housing in Toronto. A model of rent determination in the controlled and uncontrolled markets is presented. The paper then applies a hedonic pricing technique to develop indices of the uncontrolled rent relative to the controlled rent for standardized sets of housing characteristics. Approximately one-half of the difference in observed rents is attributable to quality differences between markets and one-half to the effect of rent controls.

Housing Tenure in a Model of Consumer Choice: A Simple Diagrammatic Analysis

The paper begins with a general model of demand for housing in an intertemporal utility maximization framework. Under standard assumptions the consumer is indifferent between owning and renting. Relaxation of various assumptions would explain tenure choice, but this is mathematically complex. As an alternative, a diagrammatic model of consumer choice over one period is presented which shows the effects of income, savings, housing and other prices, mortgage interest rates, rates of return on alternative investments, and tastes. Again under standard assumptions the consumer is indifferent about housing tenure. The effects on tenure choice of a change in the assumption about the availability of mortgage credit, rates of return on alternative investments and income taxes are demonstrated.

Rent control: The citizen, the market, and the state

The paper is a positive and normative public choice analysis of rent control. The positive public choice section hypothesizes that differences in rent control regimes across countries emerge out of differences in the political power of tenants and landlords, out of differing attitudes to security of tenure and the fairness of gains from property ownership, and out of differing values regarding equality of opportunity versus equality of result. The normative public choice analysis evaluates rent control by asking whether rent control would be allowed under a unanimously approved constitution. It is argued control would not be allowed; not because the objectives of control are outside the sanctioned domain of government but because control is horizontally inequitable.

Factor substitution, employment density and suburbanization

Abstract A model of an urban area producing one good for export is presented and solved to yield the employment density function. The production technology is a constant elasticity of substitution (σ) production function, unlike other models which use a Cobb-Douglas function. The shape of the employment density function proves to be sensitive to the elasticity of substitution and can diverge markedly from the usually assumed negative exponential form. The employment density function is a constant when σ = 0; always declines for positive σ but at an increasing rate if σ ≤ 1 2 ; at either an increasing rate near the city center and decreasing thereafter or always at a decreasing rate if 1 2 ; and at a decreasing rate if σ ≥ 1. When the employment density function is differentiated with respect to σ, the sign of the derivative is positive near the city center and generally negative in the outer regions; the city seems to centralize. A decline in transport costs does not always suburbanize employment; it is contingent on the nature of the production technology.