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If consumers' willingness to pay for gasoline is five times the legal price, service station owners and attendants would be tempted to claim to be out of gas at the legal price, and sell it illegally at a price of $5.00 per gallon. Oil companies, too, would be tempted to increase production to sell through illegal channels, at prices above the price ceiling of $1.00. If the government did nothing, over time it would become nearly impossible to ever find gas at $1.00 per gallon, but there would be plenty of gas available, if one knew where to find it, for prices well above $1.00.

Enforcing a price ceiling is difficult. One way to do it would be to coerce the oil companies to produce enough gasoline so that everyone can purchase 80 gallons per month. This might require the government to actually take over the production of gasoline. Another possibility is to allow the shortage to exist but to heavily police the oil companies and service stations to be sure no one is selling gasoline illegally. This would be a huge, nearly impossible, job requiring the policing of every possible gasoline outlet in the country. Furthermore, there would be an incentive for enforcement officials to accept bribes to look the other way while gasoline is sold illegally at prices above the price floor price.

Price ceilings are even more difficult to maintain than price floors. Both policies can be very costly, but in the case of price ceilings there is the added problem of powerful incentives for illegal activity.

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