Harberger's triangle, generally attributed to Arnold Harberger

Arnold Harberger

Arnold C. Harberger is a United States economist. Harberger's Triangle, widely used in welfare economics, is named after him.-Life:...

, refers to the dead weight loss associated with government intervention in a perfect market. This can happen through price floor

Price floor

A price floor is a government- or group-imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price.-Effectiveness of price floors:...

s, caps

Price ceiling

A price ceiling is a government-imposed limit on the price charged for a product. Governments intend price ceilings to protect consumers from conditions that could make necessary commodities unattainable. However, a price ceiling can cause problems if imposed for a long period without controlled...

, taxes, tariffs, or quotas.

The area represented by the triangle comes from the intersection of the supply and demand curves being cut short so that consumer surplus and producer surplus are also cut short. The loss of such surplus, not recouped by e.g. tax revenues, is the dead weight loss.

Some economists like James Tobin

James Tobin

James Tobin was an American economist who, in his lifetime, served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to...

have argued that these triangles do not have a huge impact on the economy, whereas others maintain that they can seriously affect long term economic trends by pivoting the trend downwards, thus causing a magnification of losses in the long run.