Unrealistic pricing by SOEs blocks recovery

06 December 2020 - 01:01

The government should introduce a cap on runaway administrative prices, which are the prices of products, services and rates set by state-owned entities, government utilities and municipalities, to prevent these prices from derailing a Covid-19 financial crisis recovery.

Administrative prices are either set directly by state entities or strongly influenced by them rather than by market forces. In normal private markets, where there are competitors to provide products and services, the price and quantity of products or services are set by the mechanisms of demand and supply and a multiplicity of providers to choose from...

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