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Are price controls necessarily bad? The case of rice in Vietnam
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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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Official URL: http://dx.doi.org/10.1016/j.jdeveco.2003.03.004
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 |
| 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 |
Data sourced from Thomson Reuters' Web of Knowledge
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