ESTIMATING THE COSTS OF PARTIAL-COVERAGE RENT CONTROLS - A STOCHASTIC FRONTIER APPROACH

This paper presents a modified frontier approach to estimate hedonic regressions for data on rent-controlled and uncontrolled apartments. This new approach allows me to estimate the size of the subsidy from landlords to tenants of rent-controlled apartments. In addition, this method provides the first estimates of the amount by which controls increase rents for uncontrolled apartments. The study shows that in New York City in 1968, rents in the controlled sector would rise 22%-26% upon decontrol, while rents in the uncontrolled sector would fall about 22%-25% upon removal of rent controls.