Price Controls and Queues

A few days ago I posted a blog with examples of how price controls seemed to lead to further output declines and ultimately could lead to rationing. On Feb 9, the Ukrainian Prime Minister Azarov said the following in a speech:

"Dear Colleagues.
I want special attention paid to the members of the Government those issues that determine quality of life in our country.
First of all, it is a situation on the food market. I have already said that the dire food world environment, the further the more pressure on the domestic market. The only solution here - increasing domestic production of all that is necessary for food security and price stability. At the same time we have to constantly deal with purely speculative implications on the domestic market.

February 3, 2011 signed a Memorandum of Understanding with the producers of sugar and sunflower oil, which provide stabilization of prices in these market segments of food products. As a result, we have some positive changes.

Yesterday signed a Memorandum of Understanding with the producers of grains of buckwheat, which provides fixed wholesale price for this type of grains.
Generally, this will give the opportunity to compile consumer price of buckwheat in sufficient levels. In fact, most retailers have buckwheat has declined in value.

However, this week we are faced with the absurd situation where supermarkets in the capital began to limit the number of products that can be purchased by one buyer. "


Hopefully, they'll become aware at some point that these two things can be related - and that rather than trying to control the price administratively, it makes more sense to try to stimulate competition.