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Hapless consumers at the receiving end

Saadat Husain
MARKET structure is a very important parameter in shap ing the market power, which in turn plays a crucial role in price determination Proponents of free market economy usually visualise a competitive market with infinite space for free entry and free exit, fair exchange and unhindered enforcement of contract. There is no room for super-profit in this scenario.
Rational economic agents, buyers and sellers, through fair bargaining reach equilibrium, which is optimal for both the parties. Because of unlimited buyers and sellers with no restriction on entry and exit, there is no collusion or price fixing in this market. The situation cannot be improved through any exogenous intervention.
Other forms of market are also observed throughout the world, Bangladesh not being an exception. Monopoly, duopoly, oligopoly, monopsony are widely cited structures outside the competitive model. Wresting market power is the target of major players in all these models. The players use game plans to maximise their gains.
In so doing they marshal their
resources of all categories to accomplish the cherished objective(s). Their success depends much on the strength and strategy adopted by their counter parties or clientele groups. If the counter parties are weak or they do not have a formidable strategy to fight back, the above-mentioned market players will have a clean sweep at the cost of their counter groups.
Those affected most adversely by the game plan of the monopolists, duopolists and oligopolists are the hapless consumers. They are passive, voiceless and disorganised.
On the other hand, the sellers in the noncompetitive markets are highly organised, vocal, rich, collusive and effective activists. They have easy access to influential quarters and they can present their case, however bad that may be. in an attractive package.
They are always on the prowl to maximise their gains. Their most favourite mechanism is to increase the price of the commodity on some pretext or other. They stymie the supply, create artificial scarcity and enter into collusive machination to fix the price at their preferred level with blatant nonchalance to con-
sumers’ wellbeing. In fact they like to squeeze the consumers until the pips squeak.
The targeted commodities are essential ones with low elasticity of price. They usually orchestrate the price movement with such ingenuity that consumers cannot switch over to substitute goods because, in the meantime, their prices have also increased. Consumers have to borrow or draw on their savings to buy the essential commodity whose price has been stilted by the market manipulators.
Consumers in Bangladesh have suffered very badly at the hands of the market leviathans. They had to grant whatever the market power asked for. They also had to swallow the erroneous argu ments extended by the market behemoths.
From 2004 to late 2008 major players of the noncompetitive markets increased the prices of almost all commodities on the pretext that the international prices had increased substantially. It was par tially true; staggering price increases in the local markets, however, could not be fully explained by international prices.
Starting mid 2008, prices in the international markets started plummeting. Sellers in the local markets did not follow suit with a reasonable time lag; they delayed inordinately in passing on the benefit to the consumers. Even when they did, it was too little and too late.
Consumers had no power, no organisation to pressurise the sellers to bring
down the prices immediately and com mensurate with the international price. They were helpless suckers whom the sellers could fleece blithely without encountering any resistance.
While the prices of the raw material and primary commodities came down the producers of the processed goods refused to lower the prices of their products, thanks to market power wielded by them through unethical collusion between members of the fellow trade bodies. The high price of bakery products
ther exacerbated by the operation of laws and rules relating to trading organisations. While there are elaborate arrangements to promote and protect the interest of business houses, there is hardly any program to protect the rights and promote the interest of the consumers.
The recently enacted consumers rights protection act is yet to be effective, its application in the market place hinges on the creation of the consumers rights protection directorate. The law does not provide specific means to mobilise consumers or strengthen the existing Consumers Association of Bangladesh (CAB) so that they can stand solidly as a countervailing force against the manipulation of the market players.
Apart from punitive actions provided in the act, consumers have to say "no" to arbitrary price increase by the traders 5 and, if necessary, boycott the products for a while. This would call for strong motivation and temporary sacrifice by consumers for long-term gains. Only a strong consumers movement can accomplish this task.
Consumers have suffered long, helplessly as mute observers. They failed to evoke a scintilla of sympathy from the sellers. It’s time that they should react and resort to shtick to protect their interest. We must remember that market manipulators do not listen to any precatory advice.
is a glaring example in this case.
Prices of raw materials have come down drastically but those of bakery products remained ratcheted as before. The price of puffed rice also stood unaltered, allowing the processing establishments to mop up super-profit at the cost of the consumers who failed to resist such unethical move either by raising their voices or declining to buy the product at least for some time.
The asymmetric bargaining position of business houses and consumers is fur-
Dr. Saadat Husain Is Chairman. Public Service
Commission