The DNU of “Bases for the reconstruction of the Argentine economy” has in its spirit the return to the market. Article 2 states: “The national State will promote and guarantee the effective validity, throughout the national territory, of an economic system based on free decisions, adopted in an area of free competition, respecting private property and constitutional principles of the right to free movement of goods, services and work”.
The basis for achieving this goal is seek to eliminate supply and service restrictions such as regulations that distort prices. Across the DNU, several segments are seeing restrictions lifted in order to set prices in the market. Perhaps the most affected will be the rental market, taking into account that, according to 2022 census data, almost 8 million people rent accommodation.
This segment was one of the most affected by the “Rent Law”, which caused a sharp decline in supply a price increase, which was 50% higher than the average for the economy, and 70% higher than the update formula that regulated the activity. The repeal of the law will probably allow the supply of apartments to be expanded in the short term, in a framework in which owners and tenants will be able to establish the terms of the contract according to their conditions, without being obliged to have unnecessary rules.
So, it would be expected that renting would not be an ordeal. Also the decree establishes the removal of obstacles and promotes competition in other markets, where sometimes the state “tramples” on prices, as in the case of weed or prepaid medicine. State strategy which then resulted in a decline and stagnation of the offer or a reduction in the quality of the service.
The decree also aims to expand the available offer or reduce bureaucratic obstacles, as in the case of credit cards where it allows other non-financial entities to grant them, the possibility of selling free remedies in places other than pharmacies or the “skies” aeronautical policy open” .” which will allow for more and better services, with price competition.
Decidedly, Deregulation generally benefits consumersthis is due to state interference in some markets had to incur cost overruns. On the other hand, entrepreneurs will also be able to expand their offer, to the extent necessary or in anticipation of a growth in demand.
Now, for the new rules to work, it will be necessary to continue stimulating competition. If the current measures only allowed them to set higher incomes due to the lack of alternatives, they would not have been able to achieve their cherished goal. Prices will not be reduced or supply increased.
On the other hand, The new challenge for companies will be to set market prices. Understanding the laws of supply and demand, in a context where in recent years the internal market was a hunting ground. Without competition and with greater concentration, companies could set prices and quantities to the detriment of captive consumers, whose demand was insatiable.
Therefore, many prices had no relation to those in other countries: sneakers, clothes, computers, cars or tires in the local market were well above international values. Today these conditions are starting to reverse, with foreseeable greater competition and reduced demand due to the fall in purchasing power.
Finally, There are also things to do from the State. Today there are various mechanisms that prevent us from knowing the true price of things and that lead to unnecessary costs. For example, official subsidized installments, with interest rates below the market. This causes an additional cost in the market prices that consumers have to pay. Something similar happens with the abuse of promotions and special discounts, which cause prices to be set above market prices to absorb costs by companies.
Source: Clarin
