Can the state to intervene in the pricing policies in a market economy?The answer to this question is yes, but we should clarify some important points.State regulation of prices should be provided only where it is needed.In other areas, will be optimal functioning free market mechanism.In this article we will try to explain the objectives and mechanisms of state intervention in the pricing policy.
As you know, the market economy is not developing as spontaneous as it seems.Sometimes it is adjusted to more effectively cope with their main objectives.So, we list the goals of state regulation:
- in some areas of the economy there is a natural monopoly.In these cases, free competition is not effective, and sometimes even impossible.In order to competitors of natural monopolies not to raise prices, the cost of goods and services established at the state level.Thus, reduced inflation, and to develop optimal conditions for sustainable economic growth.It is worth noting that the natural monopoly fixed in federal law;
- state regulation of prices is necessary to reduce social tensions;
- this measure enhances national competitiveness in international markets;
- happening stimulating various upgrades;
- main objective - the stabilization and optimization of the social structures of the country in the economic sphere.
State regulation of prices is typically used in areas such as e-mail, "excise" products, telegraphs, customs policy, services of railway, taxation, medicine.Indirectly affected areas such as loans, subsidies.
There are different mechanisms of regulation of the economy.Try to list the main ones:
- supervision by special bodies.The goal - the establishment of increasing the cost of consumer basket in order to determine the index of nominal growth of pensions and wages;
- indirect influence.For example, abolished or introduced customs restrictions, changes taxation;
- intervention in the process.State approves increase in production costs.For this measure would inevitably be an increase in prices;
- impact on the value of goods and services in the areas of natural monopolies.Similarly, the government sets the prices in those areas where it is a major buyer.For example, the construction, military goods, weapons;
- direct impact.In particular, the state subsidies, which significantly reduces production costs.Consequently, the rise in prices slowed down or even stopped.In addition, there is a government policy that directly affects the cost of "excise goods", which are subject to indirect taxes;
- impact on foreign trade prices.Implemented by the reduction or exemption from taxes or the granting of special loans and subsidies;
- fixed preferential prices for products produced in the economy, state-owned.For example, the energy, postal, telegraph and railway tariffs;
- state regulation of prices can be manifested in the form of establishing the limits increasing the cost of production.This mechanism is used only in extreme cases, for example, an exacerbation of tensions in society;
- transfer of control over the prices to international bodies.For example, setting the value of ferrous metals by the European association of coal and steel, fixing the prices of agricultural products in the European Community.
