Business, 15.02.2021 20:00 rleiphart1

Consider a monocentric city and suppose that the city is divided into two municipalities, East City and West City. East City includes all land east of the CBD and West City includes all land west of the CBD. Now suppose that East City decides to impose rent controls such that there is some binding limit upon rents, i. e., no developer can charge rents higher than that limit. Required:
a. Describe graphically what the shape of the city looks like under these circumstances.
b. How does this policy affect the utility or residents in East City? How about residents in West City?
c. Does this policy generate an externality? If so, is it pecuniary or non-pecuniary?
d. What implications does this have for the benefits of having multiple municipalities in a city in a world with spatial equilibrium? Why?

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Consider a monocentric city and suppose that the city is divided into two municipalities, East City...

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