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Quotation of the Day…

… is from page 88 of Armen Alchian‘s and Harold Demsetz’s March 1973 Journal of Economic History article, “The Property Rights Paradigm,” as this article is reprinted in volume 2 of The Collected Works of Armen A. Alchian (2006):

An attenuation in the bundle of rights that disallows exchange at market clearing prices will also alter the allocation of resources.  The interests pursued by men are both varied and many.  If a price ceiling or price floor prevents owners from catering to their desires for greater wealth, they will yield more to the pursuit of other goals.  For example, effective rent control encourages owners of apartments to lease them to childless adults who are less likely to damage their living quarters.  Effective rent control also prompts landlords to lease their apartments to persons possessing personal characteristics that landlords favor.  In a Chicago newspaper, the percentage of apartments-for-rent advertisements specifying that the apartment was for rent only on a “restricted” basis or only if the renter purchased the furniture rose from a pre-war low of 10 percent to a wartime high of 90 percent during the period of World War II when rent control effectively created queues of prospective renters.  Attenuations in the right to offer for sale or purchase at market clearing prices can be expected to give greater advantages to those who possess more appealing racial or personal attributes.


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