Merits & Demerits of Governmental Intervention on Pricing System with Emphasis on Controlling Organization Role

Abstract

The issue of government intervention in pricing has always been discussed by experts and economists, and various theories has been proposed by supporters of closed economy and opponents of government intervention in the pricing (open economy). Generally, the role of government has been very crucial in facing price control policies in the development of national industry, or in destruction and lack of competitiveness of industry and economic backwardness. However, government’s non-intervention in pricing and lack of attention to the prices of goods and services at various times, such as: Natural disasters, wars, etc will have many deleterious effects and may even lead to public discontent. In unusual conditions the governments as the main policy makers in the field of economy must take necessary measures in supporting people particularly the vulnerable ones against unreasonable fluctuations in commodity and service prices and control inflation through different tools such as payment of subsidies, and avoid the rise in prices of goods and services. It has a crucial role in establishing social justice and equitable distribution of income. Methodology: Studying the economy of the country after the glorious Islamic Revolution indicates the presence of government in the market and special attention of the authorities to the pricing of goods and services at various times, such as during the Sacred Defence period, development period and targeted subsidies law enforcement period. Results: Since the intervention of governments in pricing in normal circum stances is not justified and it may have various consequences such as lack of competitiveness of national products in the international arena, reduction of the private sector’s motivation to invest in the production ,the existing bureaucracy in pricing system by the government and the lack of  attention to market supply and demand mechanism, faces the government's success with some doubts in achieving the goal of afford able consumer goods and continuity in this process causes reduction in supply due to lack of interest of  the producers in competing with the prices provided by the government which ultimately leads to economic under development because of the lack of private sector participation. Conclusion: Hence it is tried to explain and describe the role of regulatory agencies to access the Resistive Economy policies purposes with an increasing domestic production approach in order to access international markets, domestic and foreign investment attraction, transparency and healthy economic and distribution systems and pricing ,utilizing up-to-date market supervision methods with some advantages and disadvantages of government intervention in pricing.