Should the Goverment Control Price ?

Published by Pokhara Research Centre on

Pokharacentre.org

The Political Economic Discussion Series occurred on 29th Nov. at PRC office on the topic “Should the government Control Price?”. The discussion was based on the article by Ritika Muley . In this article the she talks about the negative and positive aspects of price control.

The discussants were very much convinced on the government should not control price as when government sets maximum price it leads to rationing and black marketing due to high demand and less supply. This would create market disequilibrium though the price ceiling is to protect the interest of the consumers. When the price is set minimum there will be excess supply and this will lead to bargaining power to the consumer. This minimum price set is in fact done to protect the producers like agriculture commodities. Additionally, the participants of the discussion talked about price control and its relation with setting minimum wage is also not good. The discussant talked about the examples of commodities of Nepal like salt and petrol whose price are set by the government which also is not good. The government should not control the price rather it should only regulate the market which could be benefit both consumer and producer. To control negative extraneities’ in the production government should impose tax and for positive externalities government should provide subsides rather controlling the price.


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