What Happens When Government Subsidizes Demand but Restricts Supply?
Give every buyer $100,000 when there are still only ten houses, and the check goes to the buyer while the money goes to the seller. How much depends on one thing: supply.
Zesht principle
Supply matters
Giving people more money to purchase something does not automatically create more of it. If supply remains constrained, additional purchasing power may primarily increase price. Housing and education are obvious places to investigate this.
Rent Control Can Make a Cheap Apartment Too Expensive to Leave
Rent control reliably helps the tenant who already has the apartment. The best evidence shows who pays for that help: the landlord who exits and the renter still searching.
Did Student Loans Make College More Expensive?
The easy version says loans caused expensive college. The evidence says something more specific — and more useful: schools capture aid where buyers stop comparing prices.
The rest of the framework
Other principles
People respond to incentives
Change the cost or reward attached to an action and people change their behavior.
Every subsidy has an incidence
Someone receives the benefit, someone finances it, and sometimes a producer captures it.