| Sumario: | This article presents the author's comments on the article The Supply of Rental Housing, by Frank de Leeuw and Nkanta Ekanem (L-E), which appeared in the December 1971 issue. De Leeuw and Ekanem proposed to determine whether the marginal cost of housing is constant or rising as a function of the amount of housing services provided in an area. I propose to show that a nonrising supply curve is inconsistent with positive long-run land prices and to show that the housing supply elasticities developed by the authors, calculated from reduced form equations, are very sensitive to the specification of the true supply and demand functions. An alternative and perhaps more reasonable a priori specification is herein set out which is then used to calculate much different elasticities of supply. First we have briefly explained why recent theoretical findings show the L-E hypothesis of constant cost of increasing the amount of housing services on a given land area is inconsistent with the existence of positive land values. We have gone on to suggest the use of housing structures per unit land as a variable which should have been used to reflect the above fact. Secondly, we pose two reasonable alternative specifications of the supply function which would yield reduced form equations of a type estimated by L-E.
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