In a market economy, a fair price is obtained when there are many sellers and buyers of the product and all parties have the relevant and accurate information to make their decision. The fair price is likely to be based on the cost of producing and distributing the product, plus a fair margin of profit to the parties involved.
Usually, the buyer does not have the accurate information about the product and may be misled into paying an inflated price. This can occur under the following situations:
a) When the seller mis-represent the cost or value of the product
b) When the seller is unethical in profiteering, i.e. making an excessive profit at the expense of the buyer
c) When the seller has superior information that is not available to the buyer and use this information to an unfair advantage
Consumers may be misled or cheated into paying an inflated price for many types of investment products and for medical, legal services, legal and other professional services.
For investment products, it is easy to mislead the investor by making unjustified projections of the future profits from the investments. They pay a high price and do not get the value from the investment product.
For professional services, it is difficult for the consumer to judge the value and price of the professional service and may be easily over-charged.
It is important to have a system of tranparent and fair pricing for these financial products and professional services. This requires guidelines of prices to be established in a consultative manner, involving sellers and buyers, and easy access to relevant information by all parties.
Fair pricing is for the benefit of all parties and promotes honest and ethical dealings.
Tan Kin Lian
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