A toolkit for setting and evaluating price floors

Carlos Eduardo Hernández and Santiago Cantillo-Cleves

Journal of Public Economics, 2024, vol. 232, issue C

Abstract: 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.

Keywords: Price controls; Price floors; Intermediation; Market power; Incidence; Transportation (search for similar items in EconPapers)
JEL-codes: D43 D61 L51 L91 R48 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272724000203
Full text for ScienceDirect subscribers only

Related works:
Working Paper: A toolkit for setting and evaluating price floors (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:232:y:2024:i:c:s0047272724000203

DOI: 10.1016/j.jpubeco.2024.105084

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().