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Buyers often complain that prices are too high, while sellers complain that they are too low. Unhappy with the prices established by market forces, various groups might try to persuade the government to intervene and impose price control. Price controls force buyers or sellers to alter the prices of certain products. Price controls may be either price ceilings, which set a maximum legal price for a product, or price floors, which impose a minimum legal price. Imposing price controls might seem like a simple, easy way for the government to help buyers at the expense of sellers (or vice versa). The problem is that doing so frequently creates secondary effects that make both sides worse off.
Despite good intentions, price controls can, in fact, harm the very people they were intended to help because they undermine the exchange process and reduce the gains from trade. The regulation of automated teller machine (ATM) surcharge fees is one example. Many states, after being lobbied by consumer groups, enacted regulations forbidding or severely restricting the ability of ATM owners to charge fees for using their machines. The unintended consequence of these regulations is that there are now fewer ATMs available to consumers in these states because there’s less incentive to own and operate them. Consumers in these states benefit by paying lower ATM fees, but they also bear the cost of reduced ATM access.