Most countries in the world including Thailand are facing severe inflationary pressure and at the same time facing economic stagnation. In order to encourage economic growth the government must avoid creating further inflationary pressure. There are three important measures which can be used to combat inflation, namely, monetary policy, fiscal policy and direct control. During the time of high inflation, using monetary or fiscal policies may create more economic stagnation and wide spread unemployment, so the government may be persuade to use direct control measures which unfortunately create more harm than god in the long-run. The thesis is written from experiences faced by Thailand in governmental price fixing. There are many laws concerning price fixing but this thesis will emphasize only PRICE FIXING AND ANTIMONOPOLY ACT, B.E. 1979, because the government is using this act in fixing prices at present. The author mentions the principles which the government set-up in fixing prices. These principles are simple to understand but have many restrictions as well as limitations, and are quite complicated which caused uncertainties for investors and difficulties for government officials involved. Goods subjected to price fixing are usually necessities. As there are many kinds of goods subjected to price fixing, therefore the author selected only three commodities, namely, cement, sugar and petroleum products. In selecting these commodities, the author believes that they can be good exams and have wide ranging effects on the economy. From this study, it can be said that the only advantage for government price fixing is to increase government popularity during the initial period, but there are many disadvantages in the long-run.
Price fixings which does not take price mechanism into consideration usually causes excessive consumption, considerable loss of income for the country, more social and economic inequality, while the industries concerned dare not increase productive capacity or make new investment, because of the losses that might be involved. Usually price fixing causes scarcity of goods which leads to black market and tends to create monopolistics condition in the country. Governmental price fixing is one way of solving problems without looking into the real causes, so it cannot really eliminate the problems efficiently. Moreover, the operational systems of government agencies generally lack efficiency, long-term planning, and following-up. This deficiency may encourage widespread corruptions. Besides, the frequent changes of governments lead to lack of continuous policy and make it more difficulty for business to foresee what will be the next government policy. It is also more difficult for the controlled business to expand, so finally all the disadvantages become a burden to consumers. Therefore, the government should encourage free trade system, and use price fixing measure only when crisis is eminent or it is critical to help the poor. If it is necessary for the government to use price fixing measure, the government should use better measure and system than what prevail at present. At the end of this thesis, the author offers suggestions that will be very useful for the country in the time of economic crisis.
