Government mandating of prices

Price controls that set maximum prices are price ceilings, while price controls that set minimum prices are price floors.

Price controls – to judge by the long history of governments making use of such measures – has shown that, at best, they are only effective measures on an extremely short-term basis.

Mandates must be scaled back, and strict sustainability criteria must be applied to mandates for both first and second-generation biofuels. Download the related Action Aid Report, “Mandating Hunger” The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy.

Otherwise, governments are mandating not just biofuel consumption but hunger and unsustainable resource use. The goal of the program is to identify policies and international agreements that foster sustainable development.

Rent controls are another frequently cited example of the ineffectiveness of price controls.

Rent control policies widely implemented in New York City were intended to help maintain an adequate supply of affordable housing.

Regulations may restrict businesses from trying out certain pricing strategies.

First-generation biofuels, made from agricultural crops, divert food directly to fuel markets and divert land, water and other food-producing resources from their current or potential uses for production of feed for animals and food for human consumption. Mandates prop up demand for biofuels, particularly at times when oil prices are relatively low. Wise and Emily Cole assess the spread of such mandates and targets, finding that at least 64 countries now have such policies.To avoid a decrease in your profits, you must formulate a pricing strategy that considers any regulation.It will affect the pricing strategy of your business’s products in different ways.Over the long term, price controls inevitably lead to problems such as shortages, rationing, deterioration of product quality and black markets that arise to supply the price-controlled goods through unofficial channels.One example in the United States is the price controls set on gasoline established during the Nixon administration, which eventually led to major shortages in supply and long, slow lines at gas pumps.

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