Price controls are almost always a terrible idea. Economists agree on this as much as dentists agree that sugared gum is bad for your teeth. If the price of a good increases, several things happen:
- People reduce their consumption of that good.
- People find substitutes.
- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
- On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on.
Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1]
- People reduce their consumption of that good.
- People find substitutes.
- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.
- On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on.
Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1]
1. https://www.econlib.org/library/Columns/y2007/Mungergouging....