The Impact of Government-Agreed (Effectively Imposed or Price-Capped) Prices on Merchants' Behavior : A emprical study in the Democratic Republic of the Congo.

Abstract

This study examines the impact of price control policies, known as "concerted (effectively imposed or capped) prices," on the operational strategies of merchants in the Democratic Republic of Congo (DRC). While public authorities favor these measures to regulate the cost of living and protect household purchasing power, their actual market effectiveness remains a subject of controversy.

Through a qualitative analysis and a review of macroeconomic data, this research demonstrates that imposing price ceilings generates significant perverse effects. Results indicate that, rather than stabilizing prices, these interventions prompt economic agents to adopt avoidance behaviors: inventory hoarding, intentional reduction of product quality, or shifting toward informal distribution channels. The analysis highlights that merchant, operating in an inflationary environment marked by exchange rate volatility, integrate these regulatory constraints as an additional operational risk, inevitably leading to higher real prices in parallel markets.

In conclusion, this study suggests that price regulation cannot be efficient without addressing the structural determinants of the Congolese economy. Policymakers are encouraged to prioritize indirect regulation mechanisms and support supply chain fluidity rather than rigid price controls, in order to limit market segmentation and the erosion of public policy effectiveness.