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Price control to remain

Mary Rauto
Monday, June 06, 2011

NATURAL monopolies, small market size and State policies like licenses and quotas are some of the reasons that markets fail.

Speaking at a business forum in the weekend Fiji Commerce Commission chairman Dr Mahendra Reddy said price control would remain in force until markets could deliver the desired solution.

Speaking on price control, Dr Reddy asked what the business sector wanted of the commission.

"Do they want a purely competitive market," he asked. "Do they want no price control.

"Neither, they want a policy of convenience.

"They want no price control in the product market but they want price control in the factor market."

The business sector, Dr Reddy said wanted the finished product to be imposed a tariff rate while their importation of unfinished product to have no tariff.

He said they also wanted tax free zones thus attracting inefficient factories to operate in these zones.

Dr Reddy said the reality in Fiji was that there were monopolies that were abusing their powers and distorting the competitive market solution.

He also said there were dominant firms that set prices and decided on output thus distorting a competitive market solution.

While price controls were here as a temporary solution, Dr Reddy said they were placed on goods and services that were not provided via a competitive market and those goods and services that were critical for the social wellbeing as well as for economic growth. Dr Reddy said the commission had undertaken numerous work to ensure that hardship on the general population was lessened as a result of distorted market structure.

He also said impediments to volume-based surplus creation were removed and growth promoted.





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