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Price Control and Competition in Nigeria

Given the rising inflation and decreasing consumers’ purchasing power, governments often adopt several measures to cushion the impact of these macroeconomic changes on the citizens. Direct regulation of prices of selected commodities, otherwise referred to as price control, is one such measure. The underlying reason for its adoption is to cater for situations where the market-determined price (dictated by the interplay of the forces of supply and demand) is considered too high or too low. In the case of the former, the price-fixing authority uses a maximum price (or price ceiling) to protect buyers from exorbitant prices. In the case of the latter, the price-fixing authority fixes a minimum price to encourage producers and sellers. Whilst arguably price control is a veritable economic tool for the protection of consumers, increasing access to essential goods and controlling inflation through the prevention of excessive price increases, there are downsides to its adoption.

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