This case highlights the demand and supply factors that caused a sharp rise in onion prices during the period of December 2010 to January 2011. These factors ranged from natural demand and supply forces to manmade forces such as government price interventions in the form of a minimum export price and ceiling price, and a supply shortage that was artificially created by hoarders in anticipation of higher prices in the ensuing period. Government price interventions prevented price mechanisms from clearing the market. Hence, alternative clearing mechanisms such as maintenance of the surplus stock or rationing were used in the onion market. The cost of such alternative clearing mechanisms, however, falls on taxpayers. The case highlights the dilemma faced by policy makers and analysts: whether the government should intervene in the market in the short run by providing subsidies when prices are exorbitantly high, or incur heavy investment expenditures to bring about long-run stability in onion prices.

【書誌情報】

ページ数：14ページ

サイズ：A4

商品番号：HBSP-HEC049

発行日：2013/6/19

登録日：2015/9/28