What was the difference between rent controls on apartments and price controls on gasoline? In the rent control case, current tenants are insiders. They don’t have to line up for an apartment. So, as noted above, most of them will favor rent control.
In the gasoline price control case, though, everyone (unless they had a special deal with the service station owner or manager, as sometimes happened) had to line up. The fact that you managed to get gasoline last week gave you no special place in line this week. So, there aren’t many “insiders” to lobby for the gasoline price controls.
That raises an interesting possibility for ending rent control. What if the rent control regulations gave no existing tenants the preferential treatment that the current regulations give? Once a tenant’s one-year lease was up, his claim on the apartment he currently occupies would be no stronger than the claim of a want-to-be tenant. That one change in the regulation would dramatically change the political dynamics of rent control. There wouldn’t be insiders. Of course, current tenants would lobby like crazy against that regulatory change.
This is from David R. Henderson, “Rent Control Creates Privileged Tenants,” Defining Ideas,” May 15, 2025.
I taught the point of this article in my class for many years. I had never seen it stated clearly in textbooks. So I decided to write it up.
I recommend the article for economics professors and teachers for when they teach about price controls.
