Price Controls, Black markets, and Criminal Opportunities in Indonesia: A policy Analysis of Market Distortions

Abstract

Price controls and subsidies were usually judged by whether they improved affordability, stabilized markets, or imposed an excessive fiscal burden, while less attention was given to the economic value created by protected access itself. This article examined how Indonesian price interventions generated rents that could be converted into unauthorized exchange and, under narrower conditions, recurring criminal opportunities. A qualitative comparative policy analysis was conducted on subsidized fuel, subsidized fertilizer, and the 2022 cooking-oil price-control episode using primary regulations. The comparison identified three distinct rent structures. Fuel produced a persistent and relatively transferable rent, fertilizer produced an allocation-dependent rent tied to beneficiary and distribution rules, and cooking oil produced a shorter scarcity rent during rapid regulatory adjustment. The analysis showed that a price gap did not automatically create a black market. Stable illicit exchange became more plausible when rents could be repeatedly captured, transferred, and monetized at tolerable enforcement risk. Policy design therefore needed to address the location and convertibility of rents rather than rely on price rules or enforcement intensity alone.