Encourage better business practices

Sharjah shuts down produce retailers for not posting prices and failing to offer receipts. The fines might be stiff, but there is a need to encourage better business practices across the board.

In economic theory, a free market is a marvellous mechanism. In Sharjah, on the other hand … well, the fruit and vegetable market in Sharjah will very probably begin to serve customers better following this week's inspections, fines and closures.

In all, 60 of the 116 retailers at the market lost their trading licences temporarily, The National reported yesterday. The outlets will remain closed until their owners pay fines of Dh5,000 each.

This is harsh medicine for offences such as failing to display the price of each variety of vegetable and fruit, failing to provide receipts or violating price-control rules. But the merchants in question had all been given prior warnings. "I told them 20 times to put the prices for consumers, otherwise it's illegal," said Dr Hashim Al Nuaimi, the head of consumer protection at the Ministry of Economy.

There are good reasons for requiring clearly marked prices. People buying a few mangoes or a head of lettuce may not know it, but to take full advantage of a market they need what economists call "perfect information". Like much academic theory, this is simple on paper but tricky in practice: if you know each stall's price for, say, a 10kg bag of onions and can see the onions, you can choose the seller who offers the combination of freshness, quality and price that is right for you. But if prices are not posted, competition vanishes and you are at the sellers' mercy.

In the real world, of course, nobody compares 20 or 50 prices before buying an apple. Convenient location, time pressures, quick service, a smiling clerk, brand loyalty and other factors all enter the equation.

But the principle is clear, and the government is doing consumers a favour by policing produce markets - and we hope that the same vigilance will be applied to bigger companies, in food and other sectors.

True markets require honest competition, which must be instilled and then defended. In many countries, so-called better-business bureaus, organised by retailers, provide a helpful channel for complaints.

True, competition can be Darwinian. But merchants with energy and intelligence will succeed, and in doing so they share the fruits of their labours, so to speak, with buyers through lower prices for better products.

Theoretical markets are fine for professors, but in the real world government must police hygiene and open dealing, as happened in Sharjah this week and should continue to happen across the country.

Published: August 11, 2011 04:00 AM


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