Price control is a method used by a government to influence prices for the benefit of producers or consumers. Price controls are often used to prevent prices from rising too rapidly. A government may use price controls in several ways. It may establish the maximum price that can be charged for certain goods or services. It may freeze prices where they were when the controls became effective. Or a government may establish a minimum price that can be charged.
Governments may use price controls to fight inflation, a decrease in the purchasing power of money (see Inflation ). Inflation benefits some people at the expense of others, and so it can disrupt production and cause social disorder. For example, workers may strike for higher pay if the cost of living rises faster than wages.
Price controls have been used chiefly during wartime, when heavy government spending makes inflation most dangerous. The United States and Canada imposed price controls during World War II (1939-1945). The United States used price controls less successfully during the Korean War in the early 1950’s. The success of price controls depends primarily on how vigorously the government enforces the price controls and on public cooperation.
