The Legitimacy Boundary of Government Intervention in Price

Abstract

The tourism market has become an important driving force for local economic growth, thus local governments have intensions to promote the development of local tourism industry by intervening in tourist hotel room prices during major holidays. Through four events, three modes of local government intervention in hotel prices can be summarized: first, the government takes administrating price replaces the market regulation price mechanisms; second, the government takes restrictions on the pricing rights of operators while maintaining market regulation price mechanisms; third, under the market regulation price mechanisms, the governments exhort operators to exercise price self-discipline. The second model contains potential risk of breaking price rule of law because price mechanism and pricing rights of operators are confirmed by constitution. The three modes have caused intuition chaos between regions and make a consequence in dividing the nationwide tourism hotel market into fragments. Under the requirement of constructing unified national market, the order of hotel price should be maintained from unified, legal, and diverse dimension.