PROBLEMS AND POSSIBILITIES OF INDUSTRIAL PRICE CONTROL: POSTWAR FRENCH EXPERIENCE.

The application of controls in France has alternated between vigorous effort to supervise pricing in most basic industries and periods of almost complete freedom for private decisions. Since 1957, regulation has been progressively relaxed. The periods of greatest interest here are those in which controls were seriously attempted on a large scale. They include such different situations as those of generalized excess demand up to 1949 and again in 19571 the recession of 1952, and the intriguing experience of balanced expansion under conditions of very low unemployment from 1953 into 1956. The paper discusses background and administration of the regulatory system, effects on the trend of industrial prices, microeconomic effects on competition and efficiency, and relationships to aggregate expansion. Regulation of industrial prices in France has had such varied and contradictory effects that any judgment as to whether the balance has been harmful or not must be highly arbitrary. Controls caused nothing but trouble when applied to industries for which demand exceeded capacity to supply, but they did help avoid false signals of inflation deriving from market power of sellers rather than genuine scarcity.