Price Caps: Cure or Curse?

Another method of price intervention available to governments to address market failure, price caps are often controversial. Recent examples include: mobile roaming charges in the EU, payday loans, pharmaceuticals and (often discussed) rent controls.

You need to be able to evaluate the arguments for and against this method and show that you understand the potential problems that they may face.

Take a look at these resources and articles:

Tutor2U summary: https://www.slideshare.net/mobile/tutor2u/tutor2u-government-intervention-maximum-prices

Payday loans: http://www.tutor2u.net/economics/blog/price-cap-introduced-for-the-uk-payday-loans-market

Housing rents: http://www.theguardian.com/money/2015/nov/17/generation-rent-young-adults-housing-ladder-2025

Housing rents: http://www.theguardian.com/world/2016/mar/14/young-families-priced-out-rental-markets-in-two-thirds-uk

Assessing Price Caps

   

   

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