Price control in Kenya
Abstract
Until a few years ago, very little research
effort was being devoted to the study of price control as
a tool of economic management. However, recent experimentation
with price controls in many countries has
caused economists to take the issue more seriously. This
thesis is a response to price controls imposed in Kenya
in late 1971 to control prices directly and curb profiteering.
The first chapter merges traditional economlC
theory with Leibenstein's X-efficiency thesis to show
the possible consequences of price control imposed on
various market structures. The argument is that, since
the effects of price control largely depends on the
market structure in which it is imposed, justification
for the policy can only feel its way from case to case.
Chapters two and three give the historical
background to price control since it was first introduced
In Kenya at the beginning of World War II in late 1939
to 1971. Apart from chapter 9 which gives a summarised
account of how the policy has worked in other countries,
the rest of the thesis is concerned with the operation
of controls in Kenya since 1971. Aspects analysed include
its effect on the cost of living, growth and distribution
of income, collective bargaining, and the relationship
between Government and business.
The concIusion is that, although price control
promises more than it gives,there are cases where it
can be beneficial e.g. with natural monopolies, to break
'inflationary mentality' when a country is threatened
with a high rate of inflation, and in periods of
commodity shortages as long as the shortages are not
created by the policy itself. The conclusions are
tentative because (a) the topic is one in which the
theory does not provide unambiguous conclusions for all
situations, and (b) there are no handy measures by
which to gauge the effectiveness of controls in practice.
Publisher
Arts-economics