The Miracle of a Jug of Oil: Why It Costs More in Israel. Keren Harel-Harari on channel 2
JIMS-CSJE Inaugural Lecture by Nobel Laureate Robert Aumann
Virtual Library
The CSJE virtual library contains a
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The Conference Will Feature Addresses by
Leading Economic Minds and Influencers from
Israel and the United States
May 20-24
Jerusalem's David Citadel Hotel
Lack of competition in the home cooking gas industry in Israel causes Israeli consumers to
spend approximately NIS 150 million more than necessary for gas.
JIMS notes that there are 38 state-licensed companies supplying cooking gas in Israel,
but four of them control over 90 percent of the market. Forty percent of the gas is produced in the
local refineries and the rest imported. Consumer prices vary widely: the small companies charge much
less than the four large ones; industry pays about half what homeowners pay; and sometimes homeowners in the
same apartment complex pay different prices. The companies do not publish a set price list, leaving consumers unable
to comparison shop before placing an order.
JIMS cites sources among the small companies who claim the large companies charge homeowners
more than four times the cost of the gas.
The 2011 International Property Rights Index (IPRI), released by the Jerusalem Institute for
Market Studies (JIMS) and the Property Rights Alliance, ranks 129 countries (accounting for
96% of world GDP) according to their protection of both physical and intellectual property
rights. The IPRI also measures the significance of these rights for overall economic wellbeing.
The 2011 IPRI measures three areas in each country: Legal and Political Environment (LP),
Physical Property Rights (PPR), and Intellectual Property Rights (IPR). Each country is given
a score from 1 to 10 in each area and an overall score. Israel's overall score is 6.3, ranking 38
out of the 129 countries included in the index, behind most of Western Europe and North
America but also countries such as Estonia, Cyprus and the United Arab Emirates (UAE). The
Scandinavian countries, Sweden and Finland rank 1st, Norway ranks fourth.
The chief scientist at the Ministry of Trade, Industry and Labor gave grants to dozens
of companies controlled by the Ofer and Dankner groups in the past five years,
according to a new position paper issued December 20, 2011, by the Jerusalem
Institute for Market Studies (JIMS). JIMS also found that 23 of the largest 50
companies on the Tel Aviv Blutech index received grants.
"The chief scientist treats each company as an independent unit and ignores pyramidal
structures," says Yarden Gazit, a Research Fellow at JIMS who authored the paper.
"As a result, giant conglomerates receive many grants from the taxpayer, while
statistics show that the money was supposedly given to small and medium-sized
companies."
JIMS notes the fact that at least 13 companies in the Dankner group and 24 companies
in the Ofer group received grants in the years 2006-2010. Among these companies are
9 out of the 15 companies held by Clal Biotechnology, and over 20 companies held by
Ofer High Tech.
In Israel, the biblical land of olives, olive oil costs two to
three times what it costs in the U.S. and Europe. A new study by the
Jerusalem Institute for Market Studies (JIMS) shows that while Israelis pay
approximately 50 shekels for a liter of olive oil, in Spain and Greece, the world?s
biggest exporters of olive oil, consumers pay one-third of what Israelis pay: the equivalent of 17
shekels. In England and the U.S. that liter would cost 23 shekels, in France 25 shekels, and in Australia 18 shekels.
JIMS economist Keren Harel-Harari, author of the JIMS study, explains that the industry in Israel is plagued with bad policy and intentional misdeeds: ?In the past, a state-backed agency awarded seals of quality approval without establishing any system for examining the products; then it awarded ?stamps of approval? to inferior oils without explaining the difference. Last month the ministry of health found that 16 companies were selling substandard oil. The Chief Rabbinate even had to issue a warning before the Hanukkah holiday about using substandard oil.?
Through statistical manipulations, the National Insurance Institute (NII) presents a distorted picture of the state of poverty in Israel, according to the annual Jerusalem Institute for Market Studies (JIMS) Report on Poverty, issued Tuesday, November 22, in Jerusalem. Such a picture does not allow policymakers to focus their policy on the truly needy, the paper says.
"The NII poverty report is based on surveys of reported income in a given year," says Yarden Gazit, the JIMS economist who authored the Report on Poverty. "Data show that 41% of those classified as poor by the government are able to spend more than the poverty line. Some may be going into debt, but most of them probably do not belong to the ranks of the poor and do not require assistance from the welfare system."
Trachtenberg?s Plans Will Be Costly Failures
JIMS Cites Report?s Faulty Logic, Offers Alternatives
According to a report issued October 30 by the Jerusalem Institute for Market Studies
(JIMS), the members of the Trachtenberg Committee ?correctly identified the reasons
the average Israeli finds himself in debt and pays too much of his wages to the
government, which manages a centralized, cartelistic economy. But they then devoted
most of their report to planning an even more centralized economy with an even
heavier tax burden.?
The committee recommended increasing taxes by NIS 30 billion, increasing the
budgets of various government ministries that have until now failed to perform, and
empowering government employees to supervise Israelis? housing and educational
efforts.
