PRICE CONTROLS

Price controls in Venezuela

Abstract

Price controls usually enter the state, has an effect on supply and demand of goods and services subject to price controls, which are usually studied by the entrepreneurs. According to the theory of free markets, the market itself by the known laws of supply and demand should regulate the prices of goods and services, but sometimes the state decides to intervene by setting maximum prices to the public. Whether the detection of speculative phenomena or social measure aimed at protecting citizens' basic rights such as health food, the state sets a price cap on certain goods and services that have a strong effect on both the demand as in the offer. State intervention can get different results as the correction of market imperfections or simply distortion affects from suppliers to consumers. When the state makes the decision to introduce a price on a product peak, supply is recent since production becomes less attractive, so they belch capitalists invest their resources in other sectors where prices do not obey man-made elements, but the free play supply and demand. While the offer by the recent price control, you can see the demand stimulated by the existence of a reasonable and affordable price to the consumer, so that there is an excess of demand against supply, which would be lead to an increase in prices should lead to a given moment to regain an optimal level or balance point, a situation that will precisely control prices. Supply to suffer while demand increases, despite a shortage occurs, this shortage is not in a price increase that would be normal, precisely because the hand of the state that prevents a free market development since it restricts one of the factors that streamlines, which is the price. The price of goods and services and may increase or decrease the supply may also increase or decrease demand, a game that alone should keep the price that you leave satisfied both consumers and producers, but when introduced price controls, but consumers will be satisfied, a situation that makes suppliers stop producing, researching and introducing innovations, etc. In this paper, we try to focus on the price control in Venezuela. The paper discuss about the negative effects of the price control in Venezuela.

Price controls in Venezuela

Thesis Statement

Regulated products prices increase more than non-controlled and families with fewer resources have been 7% more than inflation fails to control prices in Venezuela.

Introduction

The Venezuelan economy is undergoing a profound structural change. And this is not other than that which is derived from the changes caused by advances in globalization and the collapse of capital accumulation model based on oil revenues. For most of the twentieth century the Venezuelan economy based his model capital accumulation in the appropriation of surpluses generated by the economy not internal internationally recruited under an international oil income.

This accumulation model generated a particular mode of functioning of the economy and the society that has collapsed, to the extent that the amount of income ...