Policy Paper No. 04 of 2010 on Should Kenya Revert to Price Controls?

Abstract

Prices of many essential items (including food items) in Kenya have sharply risen in the last few years. Such rises can have adverse consequences, including political and economic instability. In an attempt to address the problem, Kenya's Parliament recently passed a Bill that proposes to control the prices of essential goods, including maize, rice, wheat, cooking oil, petrol, diesel and paraffin. This study assesses whether there is a problem to justify the decision taken by Parliament; determines the most important causes of the problem; and whether price control is the most cost-effective intervention to solve the problem. The study recommends alternative policy options that may achieve what the Members of Parliament (MPs) are targeting...