Anyone who's ever taken Microeconomics 101 knows that rent control is a terrible idea. By keeping the price of housing artificially low, rent controls reduce the supply of available housing by discouraging developers and landlords from creating or offering it.

So, as legislators in Albany home in on an extension of rent stabilization laws (they expire tonight but are likely to be renewed), is New York re-upping on an economic folly?

Surveys indicate that most economists think so, viewing rent control as not only inefficient but unfair, dooming tenants to poor maintenance and—because it's not means-tested--creating potential inequities between "rich tenants" and "poor landlords."

But critics say arguments based on economic theory ignore some important parts of economic reality.

First, the vast majority of rent-regulated apartments New York State are not rent controlled but rent stabilized, meaning the rent does rise each year, albeit at a pace dictated by a government entity that takes into account costs that landlords face. (As a commentor just pointed out, this should not be taken to imply that rent controlled apartments do not also see regular rent hikes; they do. But that system serves about 39,000 people, compared to more than a million living in stabilized units.)

In fact, this aspect of New York's system is what's behind the big sticking point in negotiations over renewing the regulations: Tenants want to limit the ability of landlords to remove apartments from stabilization when the rent rises past an arbitrary, $2,000/month threshold. If the rent never rose, this wouldn't be an issue.

Second, rent control and stabilization are far from the only factors making real estate in New York less than a perfect marketplace: Zoning rules, for instance, prevent the construction of new housing to meet demand in certain parts of the city. And while an apartment in Williamsbridge is theoretically interchangeable with one in Williamsburg, in reality a tenant can't always up and move when priced out of a flat.

So maybe Microeconomics 101 is wrong, or at least not that applicable to reality in the city.

To read an economic critique of rent control, click here.

To see an alternative view, go here.