UNSPECIFIED. (2004) Are price controls necessarily bad? The case of rice in Vietnam. JOURNAL OF DEVELOPMENT ECONOMICS, 73 (1). pp. 215-232. ISSN 0304-3878

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Abstract

Most economists' instinctive reaction to price controls is that they are harmful. Its strong enforcement results in shortages and resource misallocation, while weak enforcement often leads to black markets and high transaction costs. Given these instincts, this paper assesses the pros and cons of rice price controls in Vietnam using a multi-sector multi-household general equilibrium model. These price controls fix producer prices and allow government marketing agencies to sell at higher prices and hence are, in part, a revenue raising device. As such, they may be pan of an efficient tax mix, particularly so since agricultural incomes and production go untaxed under the formal tax system. It is argued that such controls can act to dampen costly domestic adjustments in the face of volatile world prices. It is shown that this system can be supported as welfare enhancing under conditions currently prevailing in Vietnam. Crown Copyright (C) 2003 Published by Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	JOURNAL OF DEVELOPMENT ECONOMICS
Publisher:	ELSEVIER SCIENCE BV
ISSN:	0304-3878
Official Date:	February 2004
Volume:	73
Number:	1
Number of Pages:	18
Page Range:	pp. 215-232
Identification Number:	10.1016/j.jdeveco.2003.03.004
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/8828

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