Consider a market for rental housing in which the price elasticity of demand is 2 and the price elasticity of supply is 3. A rent control law is in place that sets a maximum price for rental housing which is below the equilibrium price that would arise if this market were not regulated. Each Los Locos resident will purchase at most one offroad vehicle. 10 vehicles would be purchased and 90 residents would be better off if such vehicles were outlawed. The revenues collected from this tax are distributed equally among all residents of Los Locos.
All residents are worse off with the tax.
Residents with the lowest buyer values for offroad vehicles and residents with intermediate buyer values are better off with the tax, and residents with the highest buyer values are just as well off with the tax as without the tax. All residents are better off with the tax. Participating in this market are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good.