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109. The following appeared in a letter to the editor of the Maple City newspaper.
"Twenty years ago Pine City established strict laws designed to limit the number of new buildings that could be constructed in the city. Since that time the average housing prices in Pine City have increased considerably. Chestnut City, which is about the same size as Pine City, has over the past twenty years experienced an increase in average housing prices similar to Pine City, but Chestnut City never established any laws that limit new building construction. So it is clear that laws limiting new construction have no effect on average housing prices. So if Maple City were to establish strict laws that limit new building construction, these laws will have no effect on average housing prices." Comparing the average housing prices in two cities during twenty years, the author concludes that the restraint on the number of new buildings has no effect on the price of houses in the city, and then author allegedly suggests that the same policy in Maple city will not influence the prices of houses, either. However, the authors’ argument relies on a series of assumptions, which have not been verified by the author.
To begin with, compared with another city, the argument assumes that the strict law in Pine City did not exert any impact on the price of the houses. Yet, the mere fact that the housing prices also accrue without the interference of any policy hardly suffices to infer the limitation on building construction is in vain. Theoretically, the limitation in supply will doubtlessly uphold the price in the market. As for this case, the real impact on price may probably be covered in the trend of price fluctuatution, because the policy impact may be in the same direction as the price moving. For that matter, authors’ recommendation would amount to especially poor advice.
Even assuming the policy in the Pine city is actually useless in the market, the author may not have enough reason to compare the prices in the Chestnut City with the Former one, especially if the Chestnut city has some advantages about price over the Pine city, say, more demand or less investment on construction. If the Chestnut City has more demands for landed estates or less available land to be constructed, it is reasonable to predict growth of the price in this city will outweigh the price variation in former city in the case of no policy. Besides, it may be the policy promotes the moving offset the gap of prices in two cities. In short, without ruling the reasons why the prices will move up in absence of any policy, the manager cannot positively compare the prices and justify the policy of restriction is useless on the basis of what might be a false analogy between two cities.
Even assuming the policy in the Pine city really have no impact on the price, the same policy in the Maple city could cause difference in the market. Compared with the residents in the Pine city, people in the Maple city may have more choice to solve their accommodations, say, they may rent houses, move to rural place or other cities, then the policy will drive the price fluctuate up or down.
In sum the argument relies on what might amount to a poor analogy between the prices in the Pine city or the Chestnut city, as well as a general trend that may or may not apply to The Maple city. To strengthen the argument, the author should provide better evidence of the similarities in other conditions in the two cities which may really influence the housing prices, and clear evidence that the prices in the Pine city will also ascend even without the presence of restriction on the construction. Even with this evidence, in order to properly evaluate the argument we would need to know what the difference between the Maple city and the other two may impact the price.
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