38. The author of this article argues that, to reverse declining revenues from campus
housing rentals, campus housing officials should decrease the number of available
housing units and reduce rent prices on the units. The authors line of reasoning is that
fewer available units will limit supply while lower rents will increase demand, thereby
improving overall occupancy rates, and that the resulting increase in occupancy rates
will, in turn, boost revenues for the campus. This reasoning is unconvincing for several
reasons.
To begin with, the author assumes that boosting occupancy rates will improve
revenues. All other factors remaining unchanged, this would be the case. However, the
author proposes reducing both the supply of units and their rental prices. Both of these
actions would tend to reduce revenues. The author provides no evidence that the
revenue-enhancing effect of a higher occupancy rate will exceed the revenue-decreasing
effect of reduced supply and price. Without such evidence, the argument is
unconvincing.
Secondly, the author assumes that lowering rents will lead to higher revenues by
increasing demand. However, it is possible that demand would decrease, depending on
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