What do MSG, Noodles and Price Fixing have to do With Inflation in China?

Have you ever wondered why that package of MSG and noodles costs so much in China given the incredibly low prices of local food in many restaurants? Well, it turns out that the companies who make them have been colluding to boost prices according to an article in American Progress (hat-tip: Tony Poshek). The story notes that, "the government slammed Chinese instant noodle makers Friday as being partly to blame for a surge in inflation, saying they illegally colluded to boost prices by up to 40 percent in a scheme that prompted a public outcry." Personally, I find it refreshing to see the Chinese government stepping in to let the free "ramen" market reign. And it's also good to observe that China is coming down hard on price fixing within its borders.

But while they're busy breaking up cartels and keeping a bowl of ramen affordable, they might also want to consider the importance of protecting the intellectual property of companies as well. After all, that secret combination of MSG, palm oil, dehydrated soy sauce, rice flour and assorted chemicals and colorings is not worth perfecting if its producers can't protect their "secret sauce" ...

Jason Busch

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