Rent Control: Who Really Benefits?

Every country carries its own economic system. Economic markets include pure market systems which consist of the principle in which all firms operate by private ownership with no government intervention, a pure command economy where all factors of operations are controlled by the state, and a mixed market economy that is defined as a mixture of both extremes (Sharp, Register, Grimes, 2013). In a mixed market economy private property rights are protected similar to a pure market, and firms have a wider range of how they can operate the business. There is also room for competition inside this market which allows consumers a fair price. Contrarily, governments also can create regulations in regards to prices and operations, and although limited can still cause beneficial or detrimental effects to the firms and consumers. One influence government can have in a mixed market economy is price control.

Price control is categorized as two separate entities. Price ceilings restrict the amount a business can charge a customer, and alternatively there are price floors which are a minimum amount a firm cannot charge below such as minimum wage. In theory these regulations are intended to keep competition fair among firms and that employees are paid wages that can sustain economic growth, while offering a fair price to the consumers. Throughout the history of mankind governments have tried to control prices that can be traced back to Biblical texts. In the Old Testament interest charged to fellow Israelite was prohibited. Also during medieval eras some governments created a price ceiling on bread so that all citizens were able purchase it (Rockoff, 2008). While price ceilings sound ideal based on the principle, unfortunately, there can also be adverse effects that harm businesses and consumers. This continues through time and can be seen clearly in the modern world as well. Rent controls, which are an example of a price ceiling, is a clear representation of government...