Tuesday, July 31, 2007

Regulating Beef Noodle Prices in China

In Western China the state government is considering fixing the price of beef noodles. The government is unhappy that the many hundreds of noodle stalls throughout the Xin Jiang province have been increasing prices over recent months, and is not convinced of claims by restaurant owners that the price increases reflect similar increases in the costs faced by noodle outlets.

Apparently for most people in this region, switching to other breakfast foods is not an option. THey must eat beef noodles for breakfast! As a result, they have been 'forced' to pay excessive amounts in recent months.

What intrigues me is that the Chinese government think that noodle stalls have the ability to collect monopoly profits by drawing on some sort of collective market power. Where does this market power come from? There are about ten noodle restaurants on every street fighting for the same customers! I can't see how they can possibly collude on prices.

It surprises me that the government would be so naiive in this day and age. I thought that CHina was past that.

1 comment:

Janelle said...

Mum here
I had to smile when I read this it was so you.