equilibrium price, The third objective may also be thwarted, since with
an active black market it is likely that much of the product will be
purchased only by those who can afford the high black-market price.
To the extent that binding price ceilings give rise to a black market, it is likely that the
government’s objectives motivating the imposition of the price ceiling will be thwarted.The market for healthcare in Canada is an important example in which
market-clearing prices are not charged. Instead, the prices for most
healthcare services are controlled at zero and the services are rationed by
customers having to wait their turn to be served. No black market has
arisen, although when some Canadians travel to the United States and
pay cash for health-care services that they cannot get quickly enough in
Canada, or when they pay cash for the limited services provided by
Canadian private clinics, the effects are similar to those that occur in a
black market. Even though there is not enough of the product available in
the public system to satisfy all demand at the controlled price of zero,
many people’s sense of social justice is satisfied because health care, at
least in principle, is freely and equally available to everyone. In recent
years, there has been a great deal of debate regarding potential reforms to
Canada’s health-care system; we discuss this debate in more detail in
Chapter 18.
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