Market distortion
From Wikipedia, the free encyclopedia
A market distortion is a specific type of market failure brought about by deliberate government regulation which prevents economic agents from freely establishing a clearing price.
Examples:
- Prescribing a certain price (setting price caps as well as price floors) by non-market means (e.g. price regulation - cf. socialist economy)
- Restricting the manufacture or imporation of a certain good, which thereby restricts supply.
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