So I'm reading Varian intermediate microeconomics and in chapter one it's about housing. Suppose we have a inner ring and a outer ring in a city where there is a university. In the inner ring supply is limited and everyone who can't afford it or whos reservation price is too low, moves to the outer ring.
Suppose we have a intersection of supply and demand. Now there the price should be set.
But why not increase the price for a subset of the houses since not everyone has the same reservation price couldn't you price housing in a way that everyone get's a house for his reservation price and no dollar less?