PRICE REGULATION: MAXIMUM PRICES AND MINIMUM PRICES

One of the criteria used when classifying markets is the one that differentiates free markets, which are those in which buyers and sellers make their decisions without interference from the State, from controlled or regulated markets, where the State establishes conditions. that limit the decisions of applicants and bidders
State intervention in the market can occur in different ways: the establishment of taxes, setting limits to production, establishing price caps, ... would be, among others, different modalities of intervention.
In this video we will analyze one of those modes of intervention. When the State considers that the price that takes place in the market is not convenient, and decides to regulate it.
When it adopts measures of this type, the State intends to supplant market activity in the allocation of goods and services, and it does so by establishing a policy of maximum and minimum prices.