The Advocata Institute recently released their latest report, “Price Controls in Sri Lanka: Political Theatre”, which finds that consumer price controls lead to unintended outcomes including lower quality.
Advocata advocates abolishing price controls
"Politically-motivated price controls offer very little value to reduce costs and are detrimental to trade, industry and consumers asserts The Advocata Institute, launching its new report ‘Price Controls in Sri Lanka: Political Theater’ in Colombo on Tuesday."
Price controls on foodstuffs —a political gimmick?
"The price controls slapped on a number of foodstuffs are of limited value despite their popular rhetoric, given the low adherence of traders towards the administered prices and lax enforcement actions by authorities, a recent survey conducted in Colombo and a few of the suburbs, revealed. "
Do price controls reduce the cost of living?
“Last year, the Government imposed price controls on sixteen essential items, including dhal, sugar, potatoes, and imported onions. Has this reduced prices for consumers? Unfortunately not. A recent survey by Advocata found that the controlled prices are not being followed in most instances.”
Price control - a political stunt
‘A report on competition by the Advocata Institute says that fostering competition and improving productivity are the best forms of price control. The report titled ‘Price Control in Sri Lanka: political theatre’ notes that price controls are of limited value in reducing prices of consumer goods. Such measures rather than benefiting consumers lead only to welfare losses, deterioration in product quality, reduction in investment and in the long term, higher prices.’
Price control through taxation, self-defeating
‘The government’s price control practice through taxation on essential items does not serve the purpose because it limits the value in reducing cost and damage markets by preventing the supply of products from rising to meet demand, a top market research company said.’