Price controls

[2][3][4][5] The Roman Emperor Diocletian tried to set maximum prices for all commodities in the late 3rd century AD but with little success.

[6] During the French Revolution, the Law of the Maximum set price limits on the sale of food and other staples.

It allowed the government to begin a process to scrutinise rising levels of wages (then around 8% per year) by initiating reports and inquiries and ultimately giving orders for a standstill.

In 1971, President Richard Nixon issued Executive Order 11615 (pursuant to the Economic Stabilization Act of 1970), imposing a 90-day freeze on wages and prices.

[citation needed] According to Girish Gupta from The Guardian, price controls have created a scarcity of basic goods and made black markets flourish under President Nicolás Maduro.

[20] In Sri Lanka, the Consumer Affairs Authority has the power to set the Maximum Retail Price (MRP) for goods specified by the government as essential commodities.

[21] In 2021 the Sri Lankan government enacted price controls on several essential items resulting in shortages.

Two common price floors are minimum wage laws and supply management in Canadian agriculture.

Governments use price ceilings to protect consumers from conditions that could make commodities prohibitively expensive.

[25] Further problems can occur if a government sets unrealistic price ceilings, causing business failures, stock crashes, or even economic crises.

[26] For example, Lactantius wrote that Diocletian "by various taxes, he had made all things exceedingly expensive, attempted by a law to limit their prices.

Then much blood [of merchants] was shed for trifles, men were afraid to offer anything for sale, and the scarcity became more excessive and grievous than ever.

The rationing and price controls enforced in many countries during World War II encouraged widespread black market activity.

[28] One source of black-market meat under wartime rationing was by farmers declaring fewer domestic animal births to the Ministry of Food than actually happened.

A classic example of how price controls cause shortages was during the Arab oil embargo between October 19, 1973, and March 17, 1974.

[32] Stagflation was eventually ended in the United States when the Federal Reserve under chairman Paul Volcker raised interest rates to unusually high levels.