I am happy it was not me; and I am sorry it was them. The last time I  checked the phony price hike on edible salt, it gave me the real impression of the power of the market and of the agents who have the ability to make the market look as though it could fail consumers by distorting its usual function.
 

When an exchange of information is used dishonestly, it has the potential to provide market powers to high priced items, and deter consumers from benefiting from cheaper prices as it does not allow them to trade efficiently. Consequently, price deception can directly reduce consumer welfare, but may, more importantly, impede the efficient market function by providing a source of market power.

For me, price deception is a situation where a consumer mistakenly believes a false relative price communication and uses the false information to make a purchase that would not have been made had the consumer had full information.  I do not believe that shopkeepers were trying to gain market power by charging above the competitive market price. As there was no shortage in the market at large, it was at best an attempt to persuade ill-informed consumers not to search for lower priced items, or at worst daylight robbery.
 

For a moment, let us think about what conditions are needed for a store owner to deter a consumer from searching with the use of false communication.
 

The consumer must be willing and able to search before observing the communication. This will occur if there is sufficient price dispersion within the market. The consumer must be ill-informed of the market price distribution. If the price distribution were known, then the quoted price alone would be sufficient for the consumer to perfectly evaluate the expected benefits from further search.
 

It is only when the possible alternative prices are unknown and the consumer is ignorant of the benefits of further search that the consumer becomes, in principle, willing to listen to  false communication.
 

The store owner must, in principle, have a better knowledge of alternative prices, than the consumer. This would imply an important information asymmetry between seller and the buyer. At this point, only two out of the three conditions seem very likely in the Ethiopian market and there is no prize for guessing them correctly.
 

Be that as it may, the thing is what would the government and the community learn from this episode? Of paramount importance is what actually happens. There are two points that leave much to be desired.
 

The widespread notion of markets as the solution for economic problems is too lightheaded to hold water. Markets do solve economic problems, but only when they function properly. Unfortunately, they do not usually function in that manner. They usually fail!
 

The second note is that both practicing competition policies and industrial economics have largely focused on the behavior of firms, while often neglecting the explicit role of consumers. There is always an over-emphasis on ‘seller-seller’ sources of market power that act through seller concentration, while ‘seller-consumer’ sources might be equivalent alternatives.

The Ethiopian government has now got both things finally right. There is a lot of talk on the formation of consumer cooperatives to tackle the apparent problem. No need to mention that a significant source of seller-consumer market power may arise from the establishment of consumer cooperatives where the cooperative as a seller provides the goods needed by its members as buyers.

Cooperatives, being a collective capacity, can foist any pressure on consumers to deter them from searching for the best price of a particular good. Under this circumstance, there will be no possibility of a high pricing store preventing consumers from searching and trading with other lower pricing stores. Devoid of this collective and enhanced capacity, information does not come so easily when and where it is wanted.

Then again, there is the issue of credibility. Sham cooperatives cannot prevent a store from deceiving their consumer members. Just because the Edier and Eqube models are popular in this country does not mean that a consumer cooperative shall be modeled in their format. The role of the government is indispensable here. There are some areas in life where one can or cannot agree with a government. A crisis in the market is one of them.
 

If the government cannot directly intervene in organizing the cooperatives, which in any case have nothing, it must provide some framework for them by providing both a consumer protection policy and a regulator direction.

One of the basic tools in providing this framework is by enacting a law on consumer protection and on unfair trade practices. Not on the unfair trade practices that are conducted between firms, which -in my opinion- should be regulated by some form of enterprising act;  but rather on the basic relationship that is between consumers’ proper and firms as sellers.

Should I say that hording is a crime per se and so too are collusions and cartels in any of their forms?