Sunday, May 01, 2005

Deregulation of prices welcomed - Gulf News

Gulf News' headline actually is "Move to regulate prices is hailed."

Let's get this straight: when the government ends government sanctioned monopoly in importation and distribution of a good that's not regulation, that's deregulation. That's letting markets do what markets are good at.

It is good of the authorities to allow entry into these markets. I hope they mean it. As the following quotation suggests, it is not yet clear what the government means:
However, the big retailers are awaiting details because the move has to gain approval of the higher authorities. There are many issues involved and a clear picture is yet to emerge.

A meeting of the Foodstuffs and Price Control Committee held on Thursday said consumer societies and establishments will be allowed to import commodities directly and will not have to buy from agencies. “We are unsure at this stage whether all retailers, big and small fall within this ruling or whether it is only for the Cooperatives. But direct sourcing will lead to more efficient purchasing among the retailers and ultimately would result in lower prices,” said an executive of a leading hypermarket.

An economists' advice: no retailer, big and small should have to buy from the agencies.

In the meantime, a rearguard action is mobilizing:
But some market experts believe it is not easy to allow free imports. “Of course we are all aiming for a free marketplace, a global market where everyone can sell and buy anything, anywhere. “But there are some products that are meant specifically for this region and this is an issue that needs attention,” said the marketing manager of an international foods company.
This is a bogus argument. Consumers need to take some responsibility by purchasing from stores that have developed a reputation for honest dealing. The cooperatives and the large retailers fall into this category. In any event, such an argument applies to only a small slice of the products in the marketplace, and consumers know what products these are.

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