Implications,Types and Necessity of Price Regulation in the Market Economy

The free price mechanism is a basic mechanism of the market economy,but it does not mean that government intervention is no longer required.Price regulation includes stipulations or limitations of the price level,price changes,price structure,and price behaviors,etc.According to different criteria,the price regulation can be divided into different types.Price regulation becomes a necessity in the market economy because of the existence of monopoly,the externalities of economy,asymmetric information,common goods,market speculation and non-rational group behaviors and the requirements for the social guarantee and the government investment.In the market economy,reasonable price regulation is an essential condition of the maximization of the economic efficiency and the social welfare.