Price Ceiling:

A price ceiling is a government-imposed limit on how high a price can be charged on a product. For a price ceiling to be effective, it must differ from the free market price. In the graph at right, the supply and demand curves intersect to determine the free-market quantity and price.
A price ceiling can be set above or below the free-market equilibrium price. In the graph at right, the dashed line represents a price ceiling set above the free-market price, called a non-binding price ceiling. In this case, the ceiling has no practical effect. The government has mandated a maximum price, but the market price is established well below that.

In contrast, the solid green line is a price ceiling set below the free-market price, called a binding price-ceiling. In this case, the price ceiling has a measurable impact on the market.
A price ceiling set below the free-market price has several effects. Suppliers find they can no longer charge what they had been charging for their products. As a result, some suppliers drop out of the market. This represents a reduction in the quantity supplied. Meanwhile, consumers find that they can now buy the same product at a lower price. As a result quantity demanded increases.

As a result of these two actions, quantity demanded exceeds quantity supplied and a shortage emerges. This leads to various forms of non-price competition.