Can New York and Los Angeles learn from Kumasi and Bangalore? Costs and benefits of rent controls in developing countries

Abstract This article presents comparative static estimates of the costs and benefits of rent controls for four developing‐country cities: Cairo, Egypt; Kumasi, Ghana; Bangalore, India; and Rio de Janeiro, Brazil. The results are compared with those from four U.S. cities: New York; Los Angeles; Santa Monica; and Washington, DC. Rent control regimes and their effects vary widely across cities and countries. Whatever the “average” cost or benefit of controls, all markets have large variances about the average, and the variation is rarely strongly related to income or other household characteristics in a way most people would find desirable. In the countries for which there was direct evidence, landlords were richer than tenants on average, but not remarkably so, and there was considerable overlap in the two income distributions. In Cairo, where there was direct evidence, key money made up much of the difference between controlled rents and market rents. In very strict regimes, substantial reductions in rent...