Economics Article Analysis : Price controls amid anti-dumping probe

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International Baccalaureate

Economics Higher Level

Inter Community School of Zurich

Marc Fleming

Extract Title:

Price controls amid anti-dumping probe

Source of Extract

Bangkok Post

www. Bangkokpost.com

Extract date:

Monday February 18 2002

Word Count:

447

Syllabus Links:

2 & 3

This article discusses how the Thai government implemented a price ceiling on various hot rolled still products because domestic firms were exploiting the situation of the imposed surcharges on imported steel.

Price ceilings are a form of market intervention employed by governments to control price levels. They are also known maximum prices. A maximum price is a set physical limit of price, this meaning that the price of a given product may not exceed the set limit. Surcharges are a form of protectionism employed by the government; they are tariffs, which are placed on imported products to protect home markets.
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In the article, it is stated that various foreign companies were dumping their excess steel products into the Thai market. This means these imports were being sold at prices below that of production costs, putting local companies out of business. The Thai government decide to take action by taxing all imported steel. The diagram below illustrates how this works and what effects are.

The tax increases the price of steel imports from p1 --> p2 what this does is increase the amount domestically supplied steel from qD1 --> qD2. It can also be seen that quantity ...

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