When thinking of “market distortions” we typically imagine government regulations, taxes, and subsidies that prevent market mechanisms from achieving an optimal outcome. For example, if you pay $100 for a 30-minute taxi ride (as is the case in many European capitals), you can easily relate it to a government regulation requiring all taxi drivers to be licensed (at a very high cost). In the absence of such a requirement, many more drivers would be able to enter the taxi driving profession, increasing supply and reducing prices.
In May, sale and rental prices for residential property in Tbilisi were lower by 4.0% and 3.3% resectively than in the same month a year earlier. The selling prices of residential property declined in May, both in monthly and annual terms. Despite this, the trend line on Chart 1 indicates a tendency towards an overall price increase since Feb. 2013.
On February 4, 2014, Daniel Levy, professor of economics at Bar Ilan University and Emory University and member of ISET’s International Faculty Committee, presented his paper “Asymmetric Price Adjustment in the Small", (that he co-authored with Haipeng Chen, Sourav Ray, and Marc Bergen) to ISET professors, students and researchers.
While ISET’s Khachapuri Index continues to climb up in a perfectly predictable fashion – driven by the seasonal increase in the price of cheese – a bit of drama is being provided by the ups and downs in the price of eggs. According to ISET data, egg prices, which for a couple of years hovered around 29 tetri a piece, suddenly collapsed in June and July 2013 to a minimum of about 26 tetri.
On November 28, ISET hosted a seminar delivered by two experts working for E-control Austria – Eszter Suele (Resident Twinning Advisor) and Leo Kammerdiener (Senior Tariff and Regulatory Expert). E-control Austria is collaborating with the Georgian National Energy and Water Supply Regulatory Commission (GNERC) under a “Twinning Project” to improve the Georgian electricity regulation that promotes long-term investments and helps establish methods of tariff calculation in line with European Union standards and best practices, namely incentive-based tariff regulations.