Fair Trading Commission cannot set prices
THE EDITOR, Madam:
Reference is made to the article ‘Transport hike – shutdown looms as busmen, cabbies demand fare rise’ published in The Gleaner on Tuesday, June 16. The article expresses the concern of the Transport Operators Development Sustainable Services (TODSS) that the revenue earned from public transportation is inadequate to cover the cost of operating public passenger vehicles.
The Fair Trading Commission (FTC) takes note that the general secretary of the TODSS, Dianne Dennis, expressed frustration over the absence of the FTC in lobbying for a fare increase on behalf of the operators.
To this point, please allow me the opportunity to point out to your readers that FTC has no statutory role in the setting or reviewing of prices in the transportation or any other sector.
In fact, the FTC operates on the general principle that price is best determined by the undisturbed market forces of demand and supply. The FTC is mindful, however, that in markets with externalities, market forces would not establish prices that are best for the society, and therefore, price setting by a regulatory body is warranted.
The public transportation sector exhibits positive externalities as the benefits to society of public transportation (which include transporting the more economically vulnerable members of the society between home, work, school, etc.) often exceed the private benefits.
Accordingly, the FTC stands prepared to assist in resolving the issue as regulators setting fare levels must seek to establish the appropriate balance between addressing the need for operators to recover the costs of providing their service and the need for even the most economically vulnerable members of the society to access public transportation.
Fair Trading Commission