Regulated Prices, Rent Seeking, and Consumer Surplus.

Price controls lead to misallocation of goods and encourage rent seeking. The misallocation effect alone ensures that a price control always reduces consumer surplus in an otherwise-competitive market with convex demand if supply is more elastic than demand or with log-convex demand (e.g., constant...

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Bibliographic Details

Published in:	Journal of Political Economy Vol. 120; no. 1; pp. 160 - 187
Main Authors:	Bulow, Jeremy, Klemperer, Paul
Format:	Article
Published:	University of Chicago Press Feb2012
Subjects:	Elasticity (Economics) Price regulation Mathematical models of pricing Consumers' surplus Demand function Mathematical models of supply & demand Rationing Rent seeking
Online Access:	View this record in EBSCOhost