An Instructional Exercise in Price Controls: Product Quality, Misallocation, and Public Policy
34 Pages Posted: 17 Jun 2010
Date Written: June 1, 2010
Price controls are a contentious topic in society and hence a good source for economics classroom engagement. The standard textbook analysis of price controls is lacking, however. This paper presents real-world examples and classroom exercises on the topic of price controls. The exercises complement the standard textbook analysis of price controls by including costs related to misallocation and quality degradation. The discussion questions and analytical exercises provide students with a broad view of price controls and their policy implications.
Keywords: price ceilings, quality, misallocation, consumer surplus, public policy
JEL Classification: A20, A22
Suggested Citation: Suggested Citation