This case accentuates the demand and supply factors that led to a sharp escalation in onion prices during the period of December 2010 till January 2011. These circumstances range from natural demand and supply forces to manmade powers for example government price interventions in the type of a minimum export price and ceiling price, and also a supply shortage which was artificially created by hoarders in anticipation of higher costs in the ensuing period.
From clearing the marketplace government cost interventions prevented price mechanisms. Thus, alternative clearing mechanisms including care of the excess stock or rationing were used in the onion marketplace.
The expense of such substitute clearing mechanics, however, falls on citizens. The case highlights the dilemma faced by policy makers and analysts: whether the government should intervene in the marketplace in the short run by providing subsidies when costs are exorbitantly high, or incur substantial investment expenditures to result in long-run stability in onion costs.
Publication Date: June 19, 2013 Product #: HEC049-HCB-ENG
This is just an excerpt. This case is about Global Business
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