How Do Businesses Deal with Losses Created by Price Ceilings

How Do Businesses Deal with Losses Created by Price...

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How Do Businesses Deal with Losses Created by Price Ceilings? Price ceilings provide a gain for buyers and a loss for sellers . Sellers would like to avoid the loss if they can. 1. One way to do so is called a black market . In this case, the sellers illegally raise the price and hope to get away with it. So, for example, tickets to popular events are sold by scalpers at high prices. (In California, ticket scalping is not illegal if it is not conducted at the place the event takes place.) While there are many other examples, black markets are not smart; it is just too easy to be caught. It is also not smart because of the existence of gray markets. 2. A gray market is a way of getting around the price ceiling without actually doing anything illegal. There are two forms of gray market. (a) One form of gray market involves charging for goods or services that were formerly provided free . If the rent cannot be raised on the apartment, there is nothing preventing the landlord from charging for the parking space, charging for use of the elevator, charging for gardening and cleaning services, forcing the tenants to pay for
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This note was uploaded on 01/12/2012 for the course ECON 201 taught by Professor Joyce during the Fall '07 term at Drexel.

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How Do Businesses Deal with Losses Created by Price...

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