Price control techniques in poor countries: the Tanzanian case

This paper looks at the techniques used by the Tanzanian Price Commission to fix maximum prices for locally manufactured goods. The effects of these techniques on the duel objectives of price control – economic efficiency and political stability – are analysed. After an examination of possible alternative techniques it is concluded that, despite its theoretical weaknesses, the present system of cost-plus pricing is probably the most appropriate for most Tanzanian industries, especially in view of the country's severe manpower constraint. However, greater incentives to improve productive efficiency could be incorporated into the present system.