Sunday, November 6, 2011

Why can the price of gas not be fixed at 1.00 per gallon by the government?

Secondary markets. When price controls are implemented that set the official price below the market price secondary-/black-markets arise in which the price of the commodity reflects supply, demand, and a risk premium due to possibility of punishment. Regardless of what good is affected by a price control there will be shortages and black-markets.

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