Price Controls and Market Economies

Governments usually adopt price controls to impose restrictions on the price of goods and services by employing the appealing argument that they are protecting the groups who find it difficult to meet increasing prices. Since ancient times, regulators have set maximum or minimum prices – price ceilings or price floors. A maximum price for bread was understood as a means to protect the poorest from starvation and the maximum price for house rents to protect them from becoming homeless. The minimum wage – the price floor for labor – was seen as a guarantee to prevent unskilled workers from falling below a minimum living standard.