Rent, reallocation, and a shortage: a fixed housing stock split between two renters Rent free to rise Rent held down B's demand: before $6 $4 S A B′ $4 8 2 A: 8 B: 2 A B A + B Captured by sitting tenants 10 14 Shortage = 4 Apartments Monthly rent ($) Rent $4: A holds 8, B holds 2 — 10 apartments. A and B's demands add sideways to the 10 apartments that exist. Still view: the rent is $4 and the ten apartments split 8 to A, 2 to B.