As voters demand affordability, Stanford economist argues for ‘temporary, targeted price controls’ with supply-side reforms

Price controls are literally a textbook example of a policy that creates market inefficiency, but an economist sees some merit in them as voters delivered victories to Democrats who promised to hold the line on the cost of living. Mahoney and Ramamurti also acknowledge that price controls obscure market signals that encourage producers to expand output and lower costs, pointing to President Richard Nixon’s efforts to cap gasoline prices in the 1970s. “In a cost-of-living crisis, the question isn’t whether to intervene, but how to do so in a way that delivers relief today without creating new problems tomorrow,” they said.

Author: Jason Ma

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