I would agree with you typically, but it seems in this case in Tahoe, if you don’t interfere in the market, the businesses will eventually either go out of business, or the economy will stagnate. Property owners are not willing to lower their price, why should they? Businesses can only raise the money they’re willing to offer so much. They could raise prices but then you run into a tipping point where people say you know Tahoe is just too expensive to get a sandwich. Eventually it’s a race to the top, but the top is a cliff.

I guess the businesses could close and people could just stop going to Tahoe all together.

.... which "works out in the end", but only after lots of people suffer from the required dislocations.

Is their suffering better or worse than the "distortions" caused by "interfering" in the market?

I agree with allowing the market to function, but I also believe it needs to be coupled with a land value tax to incentivise efficient use of the land. A land value tax incentives people to build up and build in a space efficient manner.

How is that possible, its surrounded by a national forrest necessarily creating a regulatory interference.