In one of the homework problem sets, we dealt with market clearing prices of apartments in the Boston area. The article I chose to write about is very similar to the homework problem mentioned above. It is about problems caused by the imbalance between demand and supply of apartments in college town, where demand heavily outstrips the limited supply.
The major problem due to the high demand is that students are often pressurized to sign the lease as early as possible, sometimes even a year in advance, without conducting thorough research on other options. This pressure and lack of opportunity to consider other options take away a consumer’s fundamental right in the free market. As a means of tackling this problem, the article states that there have been continuous efforts to implement laws that prohibit the signing of a lease before the designated date from when the payment of rent actually begins. But in my opinion, this will not address the root cause of this problem, as it will only make students find other ways to circumvent the laws and get what they want.
One possible solution could be to let the very popular apartments increase their rental price. The relatively unpopular apartments would then become more attractive as a result. This will help in spreading the demand more evenly over other apartments in college town. Of course, we do not assign certain prices to each apartment like we did in the problem set, but we should let the popular apartments increase their rental prices freely. That way, more students will turn to cheaper apartments, which will eventually reduce the pressure to “sign-early”.
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