Regulating the petrol oligopoly - The Express Tribune - 1 views
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In theory, petrol prices in Pakistan are deregulated, but in practice, the government still has considerable sway over oil pricing. This is because of the unusual structure of the oil marketing industry, which has fewer than a dozen national players, and the largest company in the industry is a state-owned entity that controls over two-thirds of the market.
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It is also a market that sells a necessary product where many of the suppliers can often have local monopolies or oligopolies. In short, it is ripe for market manipulation, unless the government acts to control such activity.
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What is the point of having a regulatory authority if it does not have the power to levy punishments for those who violate the law?
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The article is about regulating the petrol oligopoly in Pakistan. It argues that the petrol-firms under oligopoly set their own high prices, and the government is deregulating the prices but the prices are still too high.
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Oligopolies contain firms that operate at a profit maximizing level and that in the short run can have burst of price changes. These changes in prices are due to an instant attempt at increasing the market share, however this leads to issues for other firms as well as consumers. In order for this to be prevented, government regulation is an option. This article describes how instead of regulating the industry the government is operating it, and what problems this causes