Tuesday, September 19, 2006

Price controls

Recall back in the Katrina aftermath that there were fierce debates whether the government should attempt to control prices of scarce resources. One influential school of economic thought holds it as blashpemy that price controls should even be considered because, they say, price competition will assure the best allocation of resources. I called this amoral approach Doodoo Economics.

Now we get arguable evidence of the possibility that the real threat to the allocation of scarce resources was not consumer-led price controls, but producer-led price controls. At least, that's the way Bill Cara "sees it":

A study of energy markets shows manipulation, Mon., Sept. 18, 2006, 6:48 AM

As I interpret the charts in a Merrill Lynch energy study published on Friday Sept. 15, there is collusion between the energy companies and between certain traders of futures markets. As I see it.

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