This is a big story in the run up to the 2017 General Election. The Conservatives (traditionally a less interventionist, free market party) are proposing to impose a price cap to address ‘rip-off’ energy prices.
Consider these issues:
- Why is this being proposed?
- How would it work?
- Will the policy achieve its aims or is it just another example of short-sighted politics getting in the way of markets?
- Are there any other ways of achieving a more efficient outcome in the market?
- Can behavioural theory help us understand the issues and what can be done?