Price controls are back. To combat rising inflation after 2021, countries such as France have capped citizens’ energy costs, while Hungary has capped food retailers’ margins. In 2025, Mayor-elect Zohran Mamdani plans to control rent in New York. And Britain now wants to ban the resale of pop concert tickets above the original price. This is a major break from the basic principles of economics, which sanctify market prices as the key to efficient allocation.
In theory, the supply and demand analysis taught in college should apply perfectly to selling tickets for Coldplay and Dua Lipa, which involves trading fixed amounts on the stock market. If, as the UK Competition and Markets Authority claims, tickets are being resold at a margin of 50% or more on sites such as Viagogo, it means they were undervalued. StubHub, owner of Viagogo, saw its share price drop to $10.8, from the $18.8 it was trading at on the 13th.
Groups like to have a secure income, hate empty seats and don’t want to be seen as profiteers. The long online queues therefore act as a makeshift loyalty system, rationing tickets in a way more favorable to avid fans with modest incomes. Unfortunately, the bot Those who advance now inflate these prices.
However, adequately policing resale limits would require an expensive regulatory apparatus, as transactions can move to small exchanges, offshore centers or even messaging apps. In Ireland and Victoria, Australia, where ticket resale prices are capped, 14% of consumers surveyed by Bradshaw Advisory earlier this year had experienced ticket fraud, compared to less than 4% in Britain. Even if the limits worked, they would still prevent subscriptions from reaching many of the people who value them most.
The basic economics don’t fit neatly with Mamdani’s proposal to freeze rents in rent-stabilized apartments: Most owners own homes built long ago, but they benefit from the higher prices set by some new construction that must amortize large initial investments. This leaves room to reduce the former’s profits without causing a sharp decline in construction. However, some landlords are recent, debt-ridden buyers who may reduce maintenance if rents drop.
The best scenario for strategic, temporary price control is during wars or, as economist Isabella Weber pointed out in 2021, during inflationary waves. Even if they cause shortages and hurt businesses, alleviating the suffering of families can cool wage demands and limit the price spiral.
However, a better tool for curbing inflation during supply-side crises is government financing. Modern examples include the United States Strategic Petroleum Reserve and the Food Corporation of India. Governments are now adding many more buffer stock systems, including for natural gas and minerals.
Even on housing, direct provision has worked much better than rent controls: Vienna and Singapore house most of their residents through publicly sponsored programs. To replicate that in places like New York, officials need to build more and may even have to start buying homes outright.
The logic extends to entertainment: if the UK wants low-income fans to be able to attend shows, the government can establish ways for venues to allocate blocks of tickets at fixed prices. The reason countries don’t do this is because a Coldplay concert can hardly be considered a commodity. This is why states must also be cautious when interfering in market prices.
The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation, by Carlos Gomez belowit is the responsibility of CinqueGiorni
