Targeted aid to people instead of direct price regulation: analytical note
Direct price regulation in individual commodity markets generally helps stabilise price growth, although over a short-term horizon only.
In the medium and long term, it causes imbalances and might involve serious adverse consequences for regulated industries and the economy as a whole. These findings are given in the analytical note Price Regulation: When to Stop?.
Indirect price regulation (e.g. through export duties) will help smooth out price fluctuations in the domestic market, but will not protect against a rise in global prices in the long run.
In the social and economic context, targeted financial aid to the lowest-income households is a more preferable and efficient alternative to consumer price regulation, the authors of the analytical note conclude.