The Saskatchewan Alberta Border Analysis Paper

The city of Lloydminster sits on top of the Saskatchewan-Alberta border. Half of the city is in Saskatchewan and the other half in Alberta. Assume that Saskatchewan enacts a rent control law that puts a ceiling on rents well below their equilibrium market value. Predict the impact of this law on the competitive equilibrium rent in the part of Lloydminster that is in Alberta. Note that residents are allowed to freely reside in either side (Alberta or Saskatchewan) of the city.

a.Illustrate your answer with one demand and supply graph for the apartment market in the Saskatchewan side Lloydminster and another demand and supply graph for the apartment market in the Alberta side of Lloydminster. Your graphs should be drawn side by side to show the comparison.

b.Make sure that your graphs clearly show (1) the initial equilibrium before the rent control in both markets and (2) what happens after the imposition of rent control.

c.Clearly show any shifts in the demand or supply curves, and the movement along the curves for each market.

d.Label your graphs fully and provide written explanation for your graphs.

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