Price controls

World War I poster of the United States Food Administration

Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of goods even during shortages, and to slow inflation, or, alternatively, to ensure a minimum income for providers of certain goods or to try to achieve a living wage. There are two primary forms of price control: a price ceiling, the maximum price that can be charged; and a price floor, the minimum price that can be charged. A well-known example of a price ceiling is rent control, which limits the increases that a landlord is permitted by government to charge for rent. A widely used price floor is minimum wage (wages are the price of labor). Historically, price controls have often been imposed as part of a larger incomes policy package also employing wage controls and other regulatory elements.

Although price controls are routinely used by governments, Western economists generally agree that consumer price controls do not accomplish what they intend to in market economies, and many economists instead recommend such controls should be avoided.[1] However, since the credibility revolution started in the 1990s, minimum wages have found strong support among some economists.[2][3][4][5]

  1. ^ Cite error: The named reference concise was invoked but never defined (see the help page).
  2. ^ Card, David; Krueger, Alan B. (1995). "Time-Series Minimum-Wage Studies: A Meta-analysis". The American Economic Review. 85 (2): 238–243. ISSN 0002-8282. JSTOR 2117925.
  3. ^ Chletsos, Michael; Giotis, Georgios P. (2015-01-14). "The employment effect of minimum wage using 77 international studies since 1992: A meta-analysis". mpra.ub.uni-muenchen.de. Retrieved 2023-06-01.
  4. ^ Wolfson, Paul J.; Belman, Dale (2015). "15 Years of Research on U.S. Employment and the Minimum Wage". SSRN Electronic Journal. doi:10.2139/ssrn.2705499. ISSN 1556-5068.
  5. ^ Dube, Arindrajit (2019). Impacts of minimum wages: review of the international evidence. London: The National Archives. pp. 22–52. ISBN 9781912809899.