Solutions of Problems:

Government may solve the various problems caused by maximum price control by accompanying it with certain other policies such as:

(i) The government coming out with policies to reduce consumption of the good. Policies that will discourage consumption may include:

•  Reducing income levels through increased direct taxes when good is a normal good.
•  Finding cheaper substitutes for the good.
•  Creating impression that the price of the good would be reduced further in future to enhance consumer expectations of a further price cut so that they demand less now.

(ii) Government may also adopt economic policies that would increase supply of the good. Such supply management policies may include:

• Government subsidising the cost of producing the good. 
• Creating investment incentives to attract new firms to supply more of the good. 
• Importing more of the good from cheaper sources to augment domestic supply.