And that's the problem. Price caps are introduced when inflation is high and inflation is rarely if ever high on one product in isolation.
Conversely, Vietnam was until recently a major rice exporter and then the government introduced minimum prices for rice to seek farmers votes. The result? Vietnam is now a rice importer, and people are smuggling the stuff over the border from Burma causing shortages there.
Price caps cause shortages, and minimums cause oversupply. The only time price controls don't work out badly is when the price is set at the market rate, and if that's the case why bother intervening?
*Edit* I do need to edit less, as I've been adding as thoughts strike me. Apologies for that.
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
timeasmymeasure
no subject
Date: 2014-05-07 10:36 am (UTC)And that's the problem. Price caps are introduced when inflation is high and inflation is rarely if ever high on one product in isolation.
Conversely, Vietnam was until recently a major rice exporter and then the government introduced minimum prices for rice to seek farmers votes. The result? Vietnam is now a rice importer, and people are smuggling the stuff over the border from Burma causing shortages there.
Price caps cause shortages, and minimums cause oversupply. The only time price controls don't work out badly is when the price is set at the market rate, and if that's the case why bother intervening?
*Edit* I do need to edit less, as I've been adding as thoughts strike me. Apologies for that.