Ruling the Private Sector
The Folk Economics of Housing
Christopher Elmendorf, Clayton Nall & Stan Oklobdzija
Journal of Economic Perspectives, Summer 2025, Pages 45-66
Abstract:
Why is housing supply so severely restricted in US cities and suburbs? Urban economists offer two primary hypotheses: homeowner self-interest and political fragmentation. Homeowners, who outnumber and have organizational advantages over renters, are said to lobby against development to protect their property values. The fragmentation hypothesis emphasizes that development's negative externalities are borne locally while most of the benefits accrue regionally or nationally, leading localities to block housing. This paper offers another explanation: ordinary people simply do not believe that adding more housing to the regional stock would reduce housing prices. Across three original surveys of urban and suburban residents, only a minority of respondents say that a large, positive, regional housing supply shock would reduce prices or rents. These beliefs are weakly held and unstable (suggesting people have given the issue little thought), but respondents do have stable views about who is to blame for high housing prices: developers and landlords. Large, bipartisan supermajorities support price controls, demand subsidies, and restrictions on putative bad actors, policies which they believe would be more effective than supply liberalization for widespread affordability. We discuss the implications of these findings for efforts to expand the supply of housing.
Vertical Integration and Consumer Choice: Evidence from a Field Experiment
Chiara Farronato, Andrey Fradkin & Alexander MacKay
NBER Working Paper, August 2025
Abstract:
Platforms, retailers, and other firms often offer their own products alongside products sold by competitors. We study the effects of this practice by combining a field experiment that hides brands owned by Amazon (i.e., private labels) from shoppers on Amazon.com with model-based counterfactuals and welfare analysis. In the absence of private labels, consumers substitute toward products that are similar along most observable dimensions. Removing Amazon brands does not change consumers' search effort or their propensity to shop at other retail websites. Despite the ample availability of observably similar alternatives, our welfare estimates imply that, for the categories we study, removing Amazon brands would reduce consumer surplus by 5.5 percent in the short run, with approximately 10 percent of the impact due to equilibrium price increases by other sellers. The effects are heterogeneous, with consumer surplus reductions exceeding 10 percent in some categories, while other categories realize much smaller decreases when Amazon brands are removed. Demoting private labels in search results to counteract potential self-preferencing does not lead to gains in consumer surplus. This outcome arises because a subset of consumers derive greater utility from private labels and benefit from their high placement in search results.
Curbing Rising Housing Costs: A Model-Based Policy Comparison
Boaz Abramson & Tim Landvoigt
Journal of Economic Perspectives, Summer 2025, Pages 27-44
Abstract:
Recent decades have seen house prices grow strongly relative to incomes, making housing ever less affordable. We develop and quantify a model of segmented housing markets to study the drivers of rising housing costs and to evaluate policies aimed at curbing these costs. We show that rising wealth dispersion, together with stagnating housing supply, can explain the observed increase in housing costs. Demand-side policies such as down payment assistance and mortgage interest deductions inadvertently cause upward pressure on house prices and exacerbate unaffordability. Supply-side policies such as tax credits for development or construction of affordable housing lower house prices by increasing the housing stock. Which type of new housing is built matters: new construction in the high-end segments improves affordability by more in all segments of the housing market compared to new construction in bottom-end segments.
Do Debt Collection Restrictions Hurt Hospitals?
Amit Kumar, Christine Zhuowei Huang & Lynn Linghuan Wang
University of Texas Working Paper, August 2025
Abstract:
Tighter regulations on consumer debt collectors, although intended to curb predatory practices, may disrupt industries to which such debts are owed. Using a paired-county stacked difference-in-differences design, we show that these regulations adversely affect hospitals. While hospital patient volume remains unchanged, their account receivables, liabilities, and profitability deteriorate, with stronger effects for ex-ante higher financial liability and debt collector density. Hospitals respond by reducing capacity, employment, and care quality, and by steering patients to high-cost procedures. Additionally, non-profit hospitals reduce charity care for uninsured patients. Overall, ignoring spillovers of consumer financial protection laws on non-financial sectors may overstate their benefits.
Intermediaries in Decentralized Markets: Evidence from Used-Car Transactions
Fei Li et al.
NBER Working Paper, August 2025
Abstract:
We develop and estimate a spatial search-and-bargaining model to study the role of intermediaries and spatial frictions using data from the used-car market. We find that dealers earn price premiums by leveraging three key advantages: selective acquisition of higher-quality cars, superior matching efficiency, and greater bargaining power. Counterfactual simulations reveal that selective intermediation and spatial segmentation significantly affect market efficiency and consumer welfare. While dealers extract more surplus per transaction than sellers, policies reducing dealers' advantages increase search frictions and lower overall welfare. Counterintuitively, reducing spatial frictions harms consumers by shifting trade to less efficient private-seller channels.
Short-term rental bans and the hotel industry: Evidence from New York city
Sebastian Anastasi et al.
European Journal of Political Economy, September 2025
Abstract:
We examine the gains and involvement of the hotel industry in New York City’s short-term rental ban. Building on capture theory, we document that the hotel industry was better positioned to overcome collective action problems associated with lobbying and spent an order of magnitude more than home-sharing platforms like Airbnb in political contributions, particularly prior to the ban. We find that hotels’ average daily rates increased by $14 to 19 per night, depending on specification, and revenue increased by roughly $2.1 to 2.9 billion over the first eighteen months following the ban. By contrast, the effect on room nights is small and imprecisely estimated, so the revenue increase was mostly due to the increase in room rates.
Spillover effects of accessory dwelling unit development
Idil Tanrisever
Regional Science and Urban Economics, September 2025
Abstract:
Promoting accessory dwelling units (ADUs), small residential backyard units, is one way that state and local governments have attempted to boost housing supply amid rising housing costs. However, homeowners worry about the impact on property values due to increased population and density. This paper studies the effect of ADU development on neighboring property values using an instrumental variable approach. I find that a 0.5 percentage point increase (the mean ADU concentration over the sample period of 2013–2021) in ADU density leads to a 3% decrease in nearby property prices. The negative spillover effects remain consistent within a 300-meter radius, after which they become statistically insignificant. The results are robust across alternative specifications and samples and the adverse effects of ADUs are more pronounced for properties with smaller lot sizes and those in low- and middle-rent neighborhoods. I provide evidence that ADU growth contributes to neighborhood externalities, including increased parking citations, domestic violence reports, illegal dumping, and neighborhood service requests, while showing no significant effects on overall or property crime.
Housing Policy Impacts on Poverty and Inequality in Europe
Guillaume Bérard & Alain Trannoy
Review of Income and Wealth, forthcoming
Abstract:
Developed countries have addressed the challenge of improving low-income households' housing conditions through housing allowances and social housing. In this paper, we assess the effectiveness of these policies -- individually and in combination -- by comparing them to a counterfactual scenario without housing support. We examine 27 European countries using harmonized data from the EU-SILC dataset. We find that (1) cash housing benefits (housing allowances) are more cost-effective than in-kind housing benefits (social housing), and more effective at reducing poverty than inequality. This result holds even when accounting for a partial capture of cash housing benefits by landlords, as documented in several studies. (2) Some Nordic and Western countries -- especially Finland -- achieve an impressive reduction in both inequality and poverty (one-third) while spending as much as France and the UK. By contrast, France's mixed approach, combining both policies, appears to be the least cost-effective.
Superstar Firms through the Generations
Yueran Ma et al.
NBER Working Paper, August 2025
Abstract:
We present new facts about the largest American companies over the past century. In manufacturing, top firms in the 1910s, 1950s, and 2010s predominantly date back to around 1900. Even as this special generation persists, turnover among top firms has been substantial. In contrast, in retail and wholesale, we do not observe a special generation among top firms. We show in a model of firm dynamics that a special generation can arise from an industrial revolution, through the adoption of a scalable technology and learning-by-doing. Top firm turnover is matched by standard idiosyncratic productivity shocks. Time-varying market size growth rates or entry costs are not sufficient to explain the facts. Among retailers and wholesalers, learning appears absent, so a special generation would be harder to sustain. Our results highlight the potential for lasting nonstationarity among the dynamics of top firms, which can result from the long echoes of technological change.