06-2024_Pricing-News: Black Friday and Black Week: Strategic Pricing Insights
Aggressives Pricing am Black Friday und in der Black Week: Unternehmen sollten das Zusammenspiel wichtiger Faktoren beherrschen.
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The Meaningfulness of Price Controls
With her criticism of hasty interest rate hikes to combat inflation and her sympathy for strategically used, targeted price controls, she upset some media and economists. Isabella M. Weber, Assistant Professor of Economics at the University of Massachusetts Amherst, describes in a guest article in Handelsblatt on May 5, 2023, what she experienced when she expressed her opinion in the “Guardian” in 2021: strong counter-arguments even from liberal economists; students at the University of Chicago would have received an exam question about what a “real economist” would say about price controls; for her critics, the right of a company to set any price the market will bear is inviolable.
According to her, governments across Europe have already decided on certain forms of price control. In a world with overlapping emergencies – she mentions climate change, pandemic, geopolitical tensions – further shocks are to be expected, for which political decision-makers must be prepared. According to Weber, it is necessary to react before price shocks again cause major social and economic damage.
Recommendation:
You can read the interesting guest article by the economist in full on handelsblatt.de via the following link:
https://www.handelsblatt.com/meinung/gastbeitraege/gastkommentar-warum-preiskontrollen-sinnvoll-sein-koennen-/29122874.html
Pricing specialist Prof. Hans-Christian Riekhof comments: “Price controls do not really fit with a market-oriented policy. When the meaningfulness of price controls is then considered because surprisingly high profits are made in some markets, one can be very curious about the justification for price controls.”
What he believes is missing in Isabella Weber’s Handelsblatt article are terms like oligopoly, cartel office or antitrust law as well as market failure or the internalization of external effects. “Further explanations are needed here as to why ‘inappropriately’ high profits arise from the perspective of economic theory and which institutions may not have been effective here. Especially ecological issues such as the price development for fossil and non-fossil fuels require a more detailed economic analysis”, says Riekhof.