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The Coase Theorem in action

New York has some of the most tenant-friendly courts in the nation. "'It�s very pro-tenant here in terms of the courts,' said Gary L. Malin, the chief operating officer of Citi Habitats. To evict someone who isn�t paying, 'it can take six months to go through the right legal process,' he said. 'That�s six months of no rent.'" Has this made tenants better off? The answer appears to be no: though rents are sky-high, landlords find it unprofitable to add housing stock, there is a severe apartment shortage (vacancy rates are at 1%), and excess demand is such that landlords can be picky about their tenants, rejecting anyone with a housing court history, meaning that even tenants with legitimate grievances pay a huge price for seeking legal resolution. Some landlords just simply refuse to rent to attorneys. (Teri Karush Rogers, "Only the Strongest Survive", New York Times, Nov. 26). Tenants would be much better off ex ante if landlords could trust the court system to resolve disputes fairly and quickly ex post.



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.