Rent control during World War II
Rent Controls were instituted in the US in the 1940s by then-president
Franklin D. Roosevelt and his newly-formed
Office of Price Administration. The Office instituted price ceilings on a wide range of commodities, including rent controls that allowed returning World War II veterans and their families to afford housing. Following the predictions of economic models, this policy lowered the supply of rentable properties available to veterans. At the same time, there was an increase in homeownership and the number of homes for sale. This outcome could be explained by landowners converting their rentable property to sellable property, due to the financial unviability of rental markets and no incentive by the landowner to destroy their property or leave it vacant.
Apartment price control in Finland According to professors Niko Määttänen and Ari Hyytinen, price ceilings on
Helsinki City
Hitas apartments are highly inefficient economically. They cause queuing and discriminate against the handicapped, single parents, elderly, and others who are not able to queue for days. They cause inefficient allocation, as apartments are not bought by those willing to pay the most for them. Also, those who get an apartment are unwilling to leave it, even when their family or work situation changes, as they may not sell it at what they feel the market price should be. The inefficiencies increase apartment shortage and raise the market price of other apartments.
"Coulter law" in Australian rules football Uniform
wage ceilings were introduced in
Australian rules football to address uneven competition for players. In the
Victorian Football League (VFL) a declining competitive balance followed a 1925 expansion that had affected clubs such as
Footscray,
Hawthorn and
North Melbourne. The effects on financially weaker clubs were exacerbated in 1929 by the beginning of the
Great Depression. In 1930, a new ceiling system, formulated by VFL administrator George Coulter, stipulated that individual players were to be paid no more than
A£3 (approximately
A$243 in 2017) for a regular home-and-away match, that they must also be paid if they were injured, that they could be paid no more than A£12 (approximately A$975 in 2017) for a finals match, and that the wages could not be augmented with other bonuses or lump-sum payments. The "Coulter law", as it became known, remained a strictly binding price ceiling through its history. During its early years, the Coulter law adversely affected only a minority of players, such as stars and players at wealthier clubs. Those individuals experienced, in effect, a drastic cut in wages. For instance, from 1931 the ceiling payment of £3 per game fell below the legal minimum
award wage. While players at the more successful clubs of the day, such as
Richmond, had previously paid significantly higher average wages, clubs that were struggling financially often could not meet the ceiling under the Coulter law. Clubs with a longstanding
amateur ethos became significantly more competitive under the Coulter law, such as
Melbourne, which had long attracted and retained players by indirect or non-financial incentives (such as finding players employment not related to football). The Coulter law led to at least one VFL star of the 1930s,
Ron Todd, moving to the rival
VFA, because he was dissatisfied with the maximum pay that he could receive at
Collingwood. As a result of World War II, the wage for a regular game was halved (to £1 and 10 shillings) for the 1942–45 seasons. After the war, the ceilings were modified several times in line with
inflation. During the 1950s, the "Coulter law" was also blamed for shortening the careers of star players such as
John Coleman and
Brian Gleeson, as they and their clubs could not pay for the private
surgery that the players required to continue their careers. The Coulter law was abolished in 1968. However, in 1987 a club-level
salary cap was introduced by the VFL and has been retained by its successor, the
Australian Football League (AFL).
Home insurance On February 4, 2009, a
Wall Street Journal article stated, "Last month
State Farm pulled the plug on its 1.2 million homeowner policies in
Florida, citing the state's punishing price controls.... State Farm's local subsidiary recently requested an increase of 47%, but state regulators refused. State Farm says that since 2000, it has paid $1.21 in claims and expenses for every $1 of premium income received."
Venezuela On January 10, 2006, a BBC article reported that since 2003,
Venezuela President
Hugo Chávez had been setting price ceilings on food and that the price ceilings had caused
shortages and
hoarding. A January 22, 2008, article from
Associated Press stated, "Venezuelan troops are cracking down on the smuggling of food... the National Guard has seized about 750 tons of food.... Hugo Chavez ordered the military to keep people from smuggling scarce items like milk.... He's also threatened to seize farms and milk plants...." On February 28, 2009, Chávez ordered the military to seize control of all the rice processing plants in the country temporarily and to force them to produce at full capacity. He alleged they had been avoiding doing so in response to the price caps. On January 3, 2007, an
International Herald Tribune article reported that Chávez's price ceilings were causing shortages of materials used in the construction industry. According to an April 4, 2008, article from
CBS News, Chávez ordered the nationalization of the cement industry, which had been exporting its products to receive higher prices outside the country.
UK Default tariff energy price cap The
Domestic Gas and Electricity (Tariff Cap) Act 2018 (c. 21) introduced a default tariff energy price cap in England, Wales and Scotland as part of the
UK's energy policy, to safeguard the 11 million households on standard variable tariffs.
Canadian Gasoline Another example is a paper by Sen et al. that found that gasoline prices were higher in states that instituted price ceilings.
Sugar in Pakistan Another example is the
Supreme Court of Pakistan decision regarding fixing a ceiling price for sugar at 45
Pakistani rupees per kilogram. Sugar disappeared from the market because of a cartel of sugar producers and the failure of the Pakistani government to maintain supply even in the stores that it owned. The imported sugar required time to reach the country, and it could be sold at the rate fixed by the Supreme Court of Pakistan. Eventually, the government went for a review petition in the Supreme Court and obtained the withdrawal of the earlier decision of the apex court. The market equilibrium was achieved at 55 to 60 rupees per kilogram. ==See also==