Source: Adam Smith Institute
by Madsen Pirie
“Price controls are one of the most studied policy interventions in economics, and the near-universal verdict among economists is that they backfire. The core problem is that prices are signals, not villains. Prices convey information about scarcity, cost of production, and consumer demand. When a government artificially suppresses a price below the market-clearing level, it does not eliminate the underlying cost pressures; it merely hides them while creating new distortions. The basic supply-and-demand mechanism explains clearly why shortages result. A price cap set below the market price simultaneously increases demand because more consumers want the now-cheaper product, and decreases supply; producers and retailers earn less, so they reduce output, stock less, or exit the market entirely.” (05/20/26)
https://www.adamsmith.org/blog/the-snps-john-swinney-intends-to-impose-price-controls-on-food