In economics, a legally imposed maximum price that sellers may charge is called a price ceiling.
A price ceiling is binding when it is set below the market-clearing equilibrium price. At that level, buyers want more than sellers offer, creating a shortage in the simple supply-and-demand model. If the ceiling is above equilibrium, it does not constrain the market and is described as nonbinding.
Rent controls are a frequently discussed example. A government may impose them to make housing more affordable, but a binding ceiling can also reduce the quantity or quality of housing supplied. Other possible results include waiting lists, rationing, unofficial payments, and non-price competition.
A price ceiling differs from a price floor. A floor establishes a legal minimum, such as a minimum wage or an agricultural support price. The effects of either policy depend on its level, enforcement, market conditions, and the time allowed for buyers and sellers to adjust.