daily is common to hear the following: Prices are rising!, No the controls!, why not involve the government?, jail time for speculators! All these sentences are issued by journalists, taxi drivers, politicians, engineers, housewives, even by some economists outdated. For example, the prices of ingredients for the fanesca suffer a slight price increase as more closely the religious celebration of Easter. Why is this great mystery that some do not quite grasp? Prices are determined with the relationship that exists between supply and demand and when there are more people in need of a good or (beans, corn, palm, chick peas, dried fish, etc.) offer more for it and the price rises. The increase is achievable in margins as the product is perishable. Prices return to normal when people's expectations wane and more vendors appear on the market for ingredients for the fanesca. This case can be applied to each of the goods and services that compete in the Ecuadorian market. Currently, the price of bread and oil is increasing due to its main raw materials are being used to produce clean fuel. So one part of soybean production is sent to the U.S. to produce biofuels and while Oil demand in the domestic market does not change (remains constant) will follow up product shortages. The edible oil price has varied by almost 100% in less than 6 months. We must also add the great demand from Asia for this raw material. The demand for bread and oil type by nature is inelastic and so far it still is. I could not say with certainty whether it will be to be a staple, but what would happen in the short term is a substitution of one brand of oil for another brother consumers compare prices from them. Why the government should not intervene in the prices? Simply because its interference inevitably shortage of the product on the market. The argument to start the control at the current price is that only the rich can buy it and the poor. Because the price is below its natural level, many people begin to demand these goods and there will be a reduction in supply (which is produced is going to run out) and some marginal entrepreneurs (with a higher production cost ) will disappear. Governments that proclaim to be socially just apply a wide range of price controls which are socially harmful effects. We only hope that President Correa does not take, in the future, any sort of "rationing" of demand (days of purchase, quantity Maximum purchase per person) with some of the products already under state control.
Mail: emiliopa@gye.satnet.net 
