Liberalizing prices


  • Enhancing independence of market price
  • Removing price controls

Implementation

Such liberalization has been most successful in countries where stable macroeconomic policies provide a low inflation environment and governments introduce reforms gradually by reducing the number of controlled items in manageable steps. Producers and consumers are responsive to price incentives. When cement prices were freed in India in 1982, the increase in supply was so strong that market prices fell rapidly.


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