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Price Ceilings and Imperfect Competition

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  • Molho, Ian

Abstract

The effects of price ceilings on market equilibrium are traditionally analyzed either in terms of a competitive or monopolistic environment. In this paper, simple diagrammatic models of the effects of price ceilings are presented under Cournot oligopoly, with and without free entry. In both cases, the models suggest that ceilings can raise output as well as lower price but that the impact is not monotonic. These results accord more closely to the benchmark case of monopoly than to competition. Policy issues in the application of price ceilings are discussed in terms of the example of private rented housing. Copyright 1995 by Scottish Economic Society.

Suggested Citation

  • Molho, Ian, 1995. "Price Ceilings and Imperfect Competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(4), pages 392-408, November.
  • Handle: RePEc:bla:scotjp:v:42:y:1995:i:4:p:392-408
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    Cited by:

    1. Roques, Fabien A. & Savva, Nicos, 2009. "Investment under uncertainty with price ceilings in oligopolies," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 507-524, February.
    2. Roques, F.A. & Savva , N.S., 2006. "Price Cap Regulation and Investment Incentives under Demand Uncertainty," Cambridge Working Papers in Economics 0636, Faculty of Economics, University of Cambridge.
    3. Hiroaki Ino & Akira Miyaoka, 2016. "Government-induced Production Commitment in the Open Economy," Discussion Paper Series 142, School of Economics, Kwansei Gakuin University, revised May 2016.

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