The Invisible Tax

A government that wishes to raise prices has more than one tool at hand. It can pass a law that sets a minimum price, and sellers who charge less go to jail or pay a fine. Or it can tax imports, and the tax lifts the price of foreign goods, and domestic sellers raise their own prices to match. The first is called a price control. The second is called a tariff. They work through different mechanisms, but they arrive at the same place: buyers pay more than they would have paid.