Gentrification and landlords: how market failures fuel displacement
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How market failures fuel displacement
Gentrification often has two faces: at once bringing both transformation and turbulence to many urban communities. But what if the worst effects of gentrification — the displacement of long-standing residents — are not simply the result of “well-functioning” market forces, but rather of market failures that disproportionately empower landlords over tenants? Why do landlords win when the forces of gentrification descend on urban communities?
In a working paper first produced during my studies at the LSE, I present an theoretical illustrative model of a gentrifying housing market, demonstrating the mechanisms by which uncontrolled rental markets can allow landlords to accumulate monopoly power, leading to outcomes that undermine the stability of urban communities.
This working paper introduces two novel ideas: first, that these market failures are deeply rooted in the fundamentally unequal landlord-tenant relationship, and second, that there are not only social equality reasons for housing decommodification policies — like public housing provision and rent control — but that these policies are a pro-market solution to re-balance power dynamics and restore the efficient functioning of housing markets.