Proceedings of 3rd Global Accounting, Finance and Economics Conference
5 - 7 May, 2013, Rydges Melbourne, Australia, ISBN: 978-1-922069-23-8
Price Regulation on Food Items: Examination of Impacts on
Consumer in Fiji
Joel Abraham
This research carried out the clinical scenarios via simulation done
on primary data to determine if the price controls on basic food items
has impacted the consumers’ confidence and affordability in their
actual consumption practice. The research also considered if there is
a need to independent regulation of prices of basic food items in Fiji.
The findings confirm that Independent economic regulation acts as a
powerful catalyst for improving cost‐efficiency and delivering cost‐
effective investment. Regulation is a second‐best solution to
effective competition, but where such competition does not exist – as
is in FPSF – it is both necessary and valuable. An effective
regulatory framework provides the platform for improvement but it
must also seek to minimize the risk of regulators making wrong
decisions (e.g. in allowing too high a cost‐of‐capital return) due to
caution or an insufficient availability of information.
The study concludes that Price controls provide a pragmatic
approach to curbing the business sectors pricing power in areas
where competition has not, and will not, deliver meaningful benefits
to consumers. Price controls promote allocative efficiency in markets
that are not yet effectively competitive. This will ensure the benefits
of cost reductions or improvements in productive efficiency are
passed on to consumers’ However, to do so, price controls must be
targeted and set with reference to the underlying costs of providing
the service. If used in this manner, price controls can provide a
short-term measure to correct market imbalances while longer-term
reforms are implemented to target the underlying causes of market
failure. In light of the above, it is recommended that the stakeholders
in Fiji should continue with the price controls on the essentials until,
such time the market players are able to demonstrate a true
competition and are able to the fix the market failures.
Key Words: Price Control; Basic Food Items, Price Regulator, Competition Regulator;
Economic Efficiency; Consumers; Consumer Welfare
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Mr. Joel Abraham, Fiji Commerce Commission, University of the South Paicfic, Suva, Fiji,
Email: joel.abraham@ymail.com,