EclectEcon

The United Arab Emirates, concerned about the health, weight, and obesity of its nationals, is considering slapping price controls on health foods to induce consumers to buy more health foods. Unfortunately, the UAE Health Ministry is only half right: Yes, lowering the price would lead to an increase in the quantity demanded, but they are ignoring the supply side. John Chilton points out that price controls will actually lead to less consumption of healthy fruits and vegetables, contrary to the intentions of the price fixers:

Introducing a price ceiling to lower the price of healthy foods would give consumers the incentive to seek to consume more healthy food, but it will also give suppliers less incentive to provide healthy foods. Consumers will find the amount or quality of healthy food decline. Consumers will end up consuming less, not more healthy food - exactly the opposite of the good intentions of the Health Ministry.

If the ministry wants to spur consumption of healthy food it needs to either convince consumers to buy more at given prices, or subsidize healthy food in the marketplace.

Follow the link to read his take on the distinction between "nationals" and "residents" and on the expansion of Krispy Kreme donuts into the UAE.