The head of the E-commerce Association and the CEO of Snapp believe that mandated pricing has created undeniable problems for the digital economy, but MP Mojtaba Rezakhah disagrees with this opinion
According to the Iran digital economy annotation, Nima Ghazi, the head of the e-commerce association, said at the meeting on prescriptive pricing and the future of the digital economy: We should see the effects of prescriptive pricing in several sectors. When we price, transparent markets collapse and non-transparent markets gain strength. For example, in the transportation market, black brokers are increasing, in a way that cannot be traced.
He continued: Suppliers also lose their incentives to supply more. The number of active buses in the country has decreased by 97% compared to last year because the motivation of the supplier has disappeared.
We face the death of innovation
Mohammad Khalaj Qasemabadi, CEO of Snapp, also said: In the seventh plan, we are looking to double the share of the country’s digital economy, and this means that we need proper investment in this area. It is natural that a good targeting has been done and it can be increased, but in practice, command pricing destroys the attractiveness of the activity in this field. In this situation, it is impossible to imagine a future for the digital economy. In this situation, we face the death of innovation.
The CEO of Snap also said: The feature of platforms is transparency, which has many advantages, but it also brings harm. For example, people can easily take a screenshot of the page and compare the price with other places. Prescriptive pricing does not serve the user’s interests. Pricing based on supply and demand caused our average price to drop when schools opened. In many hours the price can be lower than what the order price has set.
Khalaj added: Internet taxi price regulations as an efficient model based on floating pricing is an efficient model regarding competitive pricing. We try to keep the average salary of our driver user constant in different hours. It is not possible for a driver to earn 100,000 tomans in one hour and 10,000 tomans in rainy and traffic hours.
Command pricing requires logic
Morteza Zamanian, a member of the Faculty of Management, Science and Technology of Amirkabir University, also said: You cannot deny the basis of prescriptive pricing in the economy, but we have acted so badly in using it that I wish it did not exist. If we try to use command pricing too much, it will have bad effects.
He said about the types of pricing in the economy: We have three types of pricing in the economy, one of which is the traditional pricing and the regulation that they do to prevent monopoly. Also, certain goods are included in pricing to ensure the welfare of society, goods such as bread and medicine. The third type of pricing is support, in which the government guarantees a price floor to support an industry.
This member of the academic staff of Amirkabir University continued: It should be determined what the pricing is for. In some places, pricing makes no sense. For example, mandated pricing has grounded the entire airline industry. If you ask the officials who made this decision, they don’t know why. Airplane fuel is almost free and they want to support the airline industry with the support logic. This happens almost everywhere in the world, but the pricing is free.
Zamanian stated: Is it basically possible to price platforms? If it is going to happen, it should not be in the form of prescriptive pricing. For example, the price ceiling should be determined or the profit margin should be specified.
Lack of pricing and social dissatisfaction
Mojtaba Rezakhah, the representative of Tehran in the 11th parliament and the head of the digital economy and data governance faction, did not agree with the other three guests of the meeting and believed that if pricing is not an order, many people will protest. In this regard, he said: When the word order is used for pricing, it has a negative charge. Governance should improve people’s lives and pricing is a tool. The question is whether we use this tool well or not. If pricing is not mandated, people will protest like gasoline in 2019.
This MP continued: The 2023 budget is about 40 billion dollars. We have subsidized 50 billion dollars by pricing gasoline and diesel.
In two goods, we subsidize more than the entire country’s budget, but we cannot cut it so easily because it causes social dissatisfaction. As for the aviation industry, which is sanctioned, it would fail if the government did not support it.
Rezakhah said: When I returned from America in 2017, I launched a knowledge-based startup and we are fully familiar with this space, but I believe that pricing is not the main challenge in this field. It is perhaps one of the 6 main challenges in the digital economy. The digital economy is supposed to increase productivity.
He added: It must be accepted that there are things that the private sector can handle. For example, Snap has clarified the price and made the services more accessible. This work cannot be done by the government. People who enter governance do not have expertise in these matters.
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