IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v232y2024ics0047272724000203.html
   My bibliography  Save this article

A toolkit for setting and evaluating price floors

Author

Listed:
  • Hernández, Carlos Eduardo
  • Cantillo-Cleves, Santiago

Abstract

Regulators often impose price floors to protect producers from suspected market power by intermediaries. We present a toolkit for predicting, estimating, and explaining the effect of price floors on output and the distribution of welfare. We apply this toolkit to the Colombian road freight sector, taking advantage of rate floors that intended to protect carriers from low freight rates paid by intermediaries. We find that policymakers could have predicted the effect of price floors on quantities: a reduction in quantities for the routes and products for which rate floors were binding. After their implementation in 2017, rate floors benefited carriers but reduced total welfare by 12% of market revenue.

Suggested Citation

  • Hernández, Carlos Eduardo & Cantillo-Cleves, Santiago, 2024. "A toolkit for setting and evaluating price floors," Journal of Public Economics, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:pubeco:v:232:y:2024:i:c:s0047272724000203
    DOI: 10.1016/j.jpubeco.2024.105084
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272724000203
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2024.105084?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Price controls; Price floors; Intermediation; Market power; Incidence; Transportation;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:232:y:2024:i:c:s0047272724000203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.