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Essay / Research Paper Abstract
This 5 page report discusses three specific forms of price controls imposed by the U.S. government. The creation of a system of price controls is designed to influence the market place, not through market forces but through artificially-established regulations. The three examples presented in this paper are: rent controls; natural gas; and, physician reimbursement practices.
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Page Count:
5 pages (~225 words per page)
File: D0_BWprice.rtf
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Unformatted sample text from the term paper:
of various trade strategies. According to Rajapatirana (1987), efficient industrialization and improved economic performance also depends on reduction of price controls, investment licensing regulations, financial market reforms, and labor
market reforms. However, regulatory approaches may also create market distortions and change fundamental trade and access patterns. An alternative approach to controlling prices is to restructure the market to
encourage greater competition. Clearly, it is an issue that provides a great deal of problems for debate and political maneuvering. This paper presents three examples of direct U.S.
government-imposed price controls and discusses the logic and purpose of their implementation. There have been numerous cases throughout world history in which governments
have been unwilling to let markets adjust to market-clearing prices. Instead they have established either price ceilings, which are prices above which it is illegal to buy or sell, or
price floors, which are prices below which it is illegal to buy or sell. For most of the 20th century, the natural gas industry--like the telecommunications, railroad, and
electricity industries -- was viewed as a "natural monopoly" that needed government regulation to protect consumers. According to the National Gas Supply Association (1997), the federal governments initial reaction to
the "shortages" experienced in the 1970s was to raise the price of natural gas -- not through market forces but through the creation of a system of controls designed to
encourage exploration. The result was the 1978 Natural Gas Policy Act, which created 26 categories of natural gas subject to varying degrees of price control. The Act assigned high prices
to natural gas produced in the most expensive ways--deep wells or hard-to-produce reservoirs such as "tight sands." Readily-available natural gas, however, continued to have low regulated prices. Producers responded by
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