Price Control/ Legislation

Price Control Policy The Price Control Policy is characterized as a procedure in which the government or its designated agency establishes the pricing of essential commodities. In essence, it involves the government utilizing legal means to determine the prices of specific goods, with options including both maximum and minimum price control. In Nigeria, the Price […]

Price Control Policy

The Price Control Policy is characterized as a procedure in which the government or its designated agency establishes the pricing of essential commodities. In essence, it involves the government utilizing legal means to determine the prices of specific goods, with options including both maximum and minimum price control. In Nigeria, the Price Control Board is responsible for implementing and overseeing price regulations on essential commodities.

 

Objectives Of Price Control Policy

  1. Preventing the exploitation of consumers by producers.
  2. Managing or preventing inflation.
  3. Supporting low-income earners, such as those earning minimum wage.
  4. Controlling the profits of companies, particularly monopolists.
  5. Preventing price fluctuations of certain goods, such as agricultural produce.
  6. Stabilizing the income of producers, such as farmers.
  7. Facilitating future output planning.

 

Types Of Price Control Policy

Minimum Price Control Policy: This establishes the legally lowest price for goods and services, allowing buyers to offer a higher, but not lower, price. The primary purpose is to ensure a minimum income for workers, especially during inflation, and to safeguard agricultural producers from income decline due to bumper harvests. However, it may lead to excess supply and unemployment in labor markets, as well as the emergence of a black market.

 

Maximum Price Control Policy: This sets the legally highest price at which goods and services can be sold. Sellers can offer prices below it but not above it. The objective is to protect consumers, particularly the poor, during periods of rising prices. This often results in excess demand, shortages, black market activities, secret sales, and rationing.

 

Effects of Price Control Policy

  1. a) Hoarding of goods
  2. b) Stimulation of demand, leading to excess demand
  3. c) Shortages of goods in the market
  4. d) Queues for the concerned goods
  5. e) Black market dealing and under-the-counter sales
  6. f) Reduction in supply
  7. g) Rationing of goods
  8. h) Favouritism, bribery, and corruption

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