Price Ceilings: Arguments and Universal Price Controls

Without price controls on oil in 1973, some people might not have been able to afford to heat their homes
Without rent controls, some people may not be able to afford appropriate housing
The poor are obviously better off with shortages than with higher prices
Price controls are not the only way to help the poor
- If affordable housing is a concern, a better policy than rent control is for the government to provide housing vouchers
- Housing vouchers: give qualifying consumers a voucher worth an amount of money that can be applied to any unit of housing
- Vouchers increase the supply of housing, unlike rent controls which create a shortage

What would happen if price controls on all goods remained in place for a long period of time?
- An economy with permanent, universal price controls is in essence a “command economy” (like what is in communist countries)
- in the Soviet Union, there was a list of scarce items that they weren’t permanently out of stock, but their appearance was unpredictable
- they can be without soap for washing dishes for months, but then be overstocked with cross-country skis
- people had to spend hours in lines for simple items like pineapples or cabbages (this would happed many times throughout the week)