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Price cap

A restriction under which buyers and carriers agree to handle a commodity only below a set price.

How to read the number

The mechanism works by withholding services rather than by banning sales: insurance, freight and settlement are refused above the stated level.

When the metric lies

The restriction is worked around by changing carrier and insurer, so actual transaction prices drift away from official ones and published differentials stop describing reality.

Also known as: oil price ceiling

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