Price Controls in Liberia

John Spray and Eric Werker

Economic Development and Cultural Change, 2019, vol. 67, issue 3, 461 - 491

Abstract: In 2009, the Liberian government removed a wide-reaching set of price controls. Compared with goods never subject to price ceilings, goods whose prices were liberalized showed increased prices and decreased quantity supplied. This effect was larger for products with smaller permitted markup and disproportionately affected goods in the rural consumption basket. The results do not support the hypotheses that the price controls caused queuing, allowed retailers to collude around higher price points, or were simply an instrument for corruption. Rather, they suggest that the controls effectively suppressed monopoly pricing. This provides insight into state functionality and business policy in a country with extreme poverty and weak institutions.

Date: 2019
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