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Karnataka’s plan to fix prices for Uber-Ola cabs is going to boomerang badly


Prices act as an incentive and as a signal. If price controls were bad enough in distorting the market mechanism, fixing prices is many shades worse. There will be shortages and excesses in the market as price signals no longer work. There is no incentive for drivers to go through peak hour traffic or unfavourable weather conditions when the compensation is the same as in normal conditions



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