The Cost of Price Regulation

The Biden Administration is using recent inflationary pressure as an excuse to push a progressive price regulation agenda that would harm consumers, businesses, and ultimately the U.S. economy. Although decades of economic study and experience confirms that market pricing is a pillar of a functioning free market, the Federal Trade Commission is proposing a “Trade Regulation Rule on Unfair or Deceptive Fees” that would impose an economy-wide rule to regulate and prohibit so-called “junk fees.” If adopted, this rule would unduly burden business, confuse consumers, reduce product offerings, and, worst of all, raise prices for many consumers by forcing them to pay for services that they neither want nor need. 

By Sean Heather & Curtis Dubay^[1]

Prices are a pillar of functional markets. As any economist knows through study, and any business knows through experience, prices send signals to all market participants – businesses, and consumers – about what to make, how much to produce, and how much to buy. It sounds simple in practice, but properly set prices set off an invisible set of intricately coordinated activities that result in the right amount of production of all the goods and services in an economy, as well as providing signaling where to invest in new products.

Study and experience also teach that, when governments interfere in the market’s setting of prices, those intrusions can cause enormous harm. When allowed to function freely, prices