Vladimir Putin recalled a quote from Milton Friedman

Vladimir Putin, in connection with the idea of ​​a cap on energy prices in the Russian Federation, recalled a quote from Nobel laureate Milton Friedman that restrictions would lead to shortages, TASS reports.

If I were in the hall, I would ask him a question: do you know, Ladim Ladymych, that we are talking about a competitive market, where marginal costs must be equal to the price, which we call equilibrium? If we are talking about a non-competitive market, where there is collusion on the supply side, prices do not correspond to marginal costs, and the price is not what it would be in the competitive market scenario (the fact is higher than the counterfact), then the introduction of a ceiling (at the level of a competitive price or even slightly higher, but lower than the actual one) will not lead to a shortage here. Unless you decide to refuse deliveries for other reasons.

The answer would, of course, kill (perhaps literally).

The measure itself is not yet clear how and it is not clear in what boundaries it is planned to be implemented. Yes, and in order to develop renewable energy sources or other energy alternatives - questions. But that's another story.

Grigory Bazhenov 2022-10-16