The imposition of a binding price ceiling or price floor in an otherwise free and competitive
market leads to market inefficiency.Note an important point: Binding price floors and price ceilings do not
merely create gains for some and losses for others as they redistribute
economic surplus. They also lead to a reduction in the quantity of the
product transacted and thus a reduction in total economic surplus.
Society as a whole receives less economic surplus as compared with the
free-market case. In this sense, these policies make society as a whole
worse off.