A toolkit for setting and evaluating price floors

• 成果类型: Article
• 署名作者: Hernandez, Carlos Eduardo; Cantillo-Cleves, Santiago
• 署名单位: Universidad de los Andes (Colombia); University of California System; University of California San Diego
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2024.105084
• 发表日期: 2024
• 关键词: Price controls; Price floors; intermediation; market power; incidence; transportation

摘要

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.