In late 2014, when crude oil prices were plunging in the commodities exchanges around the world, consumers were delighted to finally find relief at the pump. In Guatemala, for example, gasoline and diesel prices in December dropped by 23 percent on a year-over-year basis. In Costa Rica, however, the reduction did not even reach 10 percent, and the country still features the most expensive fossil fuel prices in Central America.

The example above is just one of many that serve to illustrate how consumer products and services in Costa Rica are generally more expensive than in other countries in the region. Why is this the case? In a recent interview with online magazine Mercados y Tendencias (Markets and Trends), Economics Professor Alfredo Alfaro Ramos of the Costa Rica Insitute of Technology (TEC) shed some light on this issue, which has to do with the presence of monopolistic behavior in some sectors of the economy:

“The more closed-off an economy is, the higher the cost in terms of domestic and imported goods. On the other hand, if you have an economy that is open, goods and services tend to be priced lower whether they are produced domestically or imported. Such is the case with wireless telephony, insurance policies and commercial lending in Costa Rica.”

With regard to the statement above, while it is true that Costa Rica enjoys some of the lowest prices in terms of wireless communications, many consumers state that their cell phone costs were actually lower when ICE – Kolbi was the de facto communications monopoly.

Professor Alfaro also indicates that higher levels of poverty in Latin America tend to impact consumer pricing. In Costa Rica, poverty rates are being revised and raised, and there are fears that they could soon reach 20 percent. One problem with comparing poverty in Costa Rica against other countries in the region is that Ticos generally enjoy higher quality of life, which tends to obfuscate poverty estimates.

According to Professor Alfaro, a greater opening of markets could help alleviate the higher cost of living in Costa Rica. “Invisible monopolies” exist in dairy, poultry and grain production in Costa Rica, and it is up to the government to intervene in that regard.