Challenges for the Free Market

The English Premium League (EPL) likes the telcos to compete for the rights to their shows, as the competition will increase the fees payable to them. SingTel and Starhub had been competing against each other for the rights, leading to higher charges payable by the viewing public.

There is some suggest that SingTel and Starhub will work together to submit a joint bid. EPL will object and may reject it. More importantly, is this a monopoly in reverse, where the combined buying power will bring down the price?

A similar situation has happened in the pricing of iron ore and other mineral products. China is a big buyer of these products. Two companies in Australia are big producers. There has been some dispute on the pricing of these products.

These are examples of the failure of the free market to determine the correct prices. When certain producers or buyers have a dominant share of the market, they can exercise pricing power to the detriment of the other party.

It is quite dangerous to rely on the free market for pricing, when it can be subject to many practical challenges. There must be some other ways to ensure a fair price, rather than depending on the free market blindly. The new approach requires the people in charge to exercise their judgement, using a more transparent process where all the affected parties are able to present their views.

There are many aspects of life in Singapore, where the reliance on the free market to determine prices has not worked well. They are in the public transport, power, water, health care and financial services. I hope that a new approach can be taken on these matters.

Tan Kin Lian