A useful way to think about price controls is that they destroy mutually beneficial Coasean bargains. By a “Coasean bargain,” I mean an offer that takes the following form: “I’ll pay you to reduce this harm” or “I’ll compensate you for bearing this harm.”
Consider minimum wage as an example of the former instance. Imagine factory workers on a hot summer day making $7.25 per hour. In a free market, they (could) strike the following deal with their employer: “We’ll go down to $7 per hour if you install AC.” Assuming that AC is sufficiently cheap, it’s a win-win. Workers get the AC, which they value
