Nov 8, 2013

Why do cartels and syndicates persist in Nepal?

Anti-competitive practices such as syndicates, cartels, price-fixing are prevalent in almost every sector of Nepalese economy. Transport sector seems to be the most affected by syndicates and cartels. General public have not only been paying premium prices for sub-par transportation services but they have also been exposed to higher risks during their travels as they are forced to travel in decades old vehicles. This has resulted in unusually high death rates due to road accidents in Nepal. Although the Supreme Court has already declared cartels illegal, the government has not bothered to enforce the decision. Similarly, other sectors of the economy like education in the service sector is also facing anti-competitive prices mainly due to collusive price fixing. Many people, especially the socialists point out to syndicates and cartels and condemn the liberalization efforts of 1990s implying that they are the results of free market economy.

But is it true? What are the causes behind these anti-competitive practices in Nepal? Why do they  persist and why does not the government make efforts to tackle such practices? Who is benefiting from these practices? My colleagues at Samriddhi, The Prosperity Foundation have tried to answer these questions by analyzing the anti-competitive practices in five sectors of Nepalese economy, namely hydropower, education, agriculture, transport and tourism. Please go through the paper and let us know what you think of the paper. Please feel free to add your opinion and information in the comments below.