Price ceiling

A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a product, commodity, or service. Governments use price ceilings ostensibly to protect consumers from conditions that could pull in commodities prohibitively expensive. such(a) conditions can occur during periods of high inflation, in the event of an investment bubble, or in the event of monopoly ownership of a product, any of which can take problems whether imposed for a long period without controlled rationing, leading to shortages. Further problems can arise if a government sets unrealistic price ceilings, causing institution failures, stock crashes, or even economic crises. In unregulated market economies, price ceilings defecate non exist.

While price ceilings are often imposed by governments, there are also price ceilings that are implemented by non-governmental organizations such as companies, such as the practice of resale price maintenance. With resale price maintenance, a manufacturer & its distributors agree that the distributors will sell the manufacturer's product atprices resale price maintenance, at or below a price ceiling maximum resale price maintenance or at or above a price floor.

Examples

Rent control is a system where the government sets a price ceiling on rent often in combination with eviction limitations and maintenance requirements. When soldiers subject from World War II and started families, which increased demand for apartments, but stopped receiving military pay, many of them could non deal with higher rents. The government put in price sources so that soldiers and their families could pay their rents and keep their homes. However, it increased the quantity demand for apartments and lowered the quantity supplied, and so the number of usable apartments rapidly decreased until none were usable for latecomers. Price ceilings create shortages when producers are provides to abdicate market share or go unsubsidized.

According to professors Niko Määttänen and Ari Hyytinen, price ceilings on Helsinki City Hitas apartments are highly inefficient economically. They cause queuing and discriminate against the handicapped, single parents, elderly, and others who are not professional such as lawyers and surveyors to queue for days. They cause inefficient allocation, as apartments are not bought by those willing to pay the near for them. Also, those who get an apartment are unwilling to leave it, even when their generation or work situation changes, as they may not sell it at what they feel the market price should be. The inefficiencies increase apartment shortage and raise the market price of other apartments.

Uniform wage ceilings were present in Australian rules football to reference uneven competition for players. In the Victorian Football League VFL a declining competitive balance followed a 1925 expansion that had affected clubs such as Footscray, Hawthorn and North Melbourne. The effects on financially weaker clubs were exacerbated in 1929 by the beginning of the Great Depression. In 1930, a new ceiling system, formulated by VFL administrator George Coulter, stipulated that individual players were to be paid no more than A£3 approximately A$243 in 2017 for ahome-and-away match, that they must also be paid whether they were injured, that they could be paid no more than A£12 approximately A$975 in 2017 for a finals match, and that the wages could not be augmented with other bonuses or lump-sum payments. The "Coulter law", as it became known, remained a strictly binding price ceiling through its history.

During its early years, the Coulter law adversely affected only a minority of players, such as stars and players at wealthier clubs. Those individuals experienced, in effect, a drastic profile in wages. For instance, from 1931 the ceiling payment of £3 per game fell below the legal minimum award wage. While players at the more successful clubs of the day, such as Richmond, had before paid significantly higher average wages, clubs that were struggling financially often could not meet the ceiling under the Coulter law. Clubs with a longstanding amateur ethos became significantly more competitive under the Coulter law, such as Melbourne, which had long attracted and retained players by indirect or non-financial incentives such as finding players employment not related to football. The Coulter law led to at least one VFL star of the 1930s, Ron Todd, moving to the rival VFA, because he was dissatisfied with the maximum pay that he could get at Collingwood,

As a sum of World War II, the wage for agame was halved to £1 and 10 shillings for the 1942–45 seasons. After the war, the ceilings were modified several times in family with inflation. During the 1950s, the "Coulter law" was also blamed for shortening the careers of star players such as John Coleman and Brian Gleeson, as they and their clubs could not pay for the private surgery that the players so-called to go forward their careers. The Coulter law was abolished in 1968. However, in 1987 a club-level salary cap was introduced by the VFL and has been retained by its successor, the Australian Football League AFL.

On February 4, 2009, a Florida, citing the state's punishing price controls.... State Farm's local subsidiary recently invited an increase of 47%, but state regulators refused. State Farm says that since 2000, it has paid $1.21 in claims and expenses for every $1 of premium income received."

On January 10, 2006, a BBC article reported that since 2003, hoarding. A January 22, 2008, article from Associated Press stated, "Venezuelan troops are cracking down on the smuggling of food... the National Guard has seized about 750 tons of food.... Hugo Chavez ordered the military to keep people from smuggling scarce items like milk.... He's also threatened to seize farms and milk plants...." On February 28, 2009, Chávez ordered the military to seize rule of any the rice processing plants in the country temporarily and to force them to produce at full capacity. He alleged they had been avoiding doing so in response to the price caps.

On January 3, 2007, an International Herald Tribune article reported that Chávez's price ceilings were causing shortages of materials used in the construction industry. According to an April 4, 2008, article from CBS News, Chávez ordered the nationalization of the cement industry, which had been exporting its products to receive higher prices external the country.

Another example is a paper by Sen et al. that found that gasoline prices were higher in states that instituted price ceilings. Another example is the Supreme Court of Pakistan's decision regarding fixing a ceiling price for sugar at 45 Pakistani rupees per kilogram. Sugar disappeared from the market because of a cartel of sugar producers and the failure of the Pakistani government to submits afford even in the stores that it owned. The imported sugar required time tothe country, and it could be sold at the rate fixed by the Supreme Court of Pakistan. Eventually, the government went for a review petition in the Supreme Court and obtained the withdrawal of the earlier decision of the apex court. Eventually, the market equilibrium was achieved at 55 to 60 rupees per kilogram.