The market price (according to the legislation of the Russian Federation on taxes) is the price of a product that has developed under the conditions of free interaction of supply and demand in the market for homogeneous or identical goods in economically comparable conditions.
The market price is determined in accordance with the Tax Code of the Russian Federation. When it is formed, allowances or discounts caused by the loss of commercial qualities or other consumer properties, seasonal fluctuations in demand, marketing policies, expiration dates, sale of samples or experimental models of goods, etc. are taken into account.
When determining prices in market conditions, transactions between persons that are not interdependent are taken into account. The pricing is affected by information about transactions with identical goods concluded before (taking into account the volume of goods delivered, delivery times, terms of payments, other factors that may affect the price increase or decrease.
Market Price Features:
- orienting (gives information about a group of goods);
- distribution (balances the income of participants in the economy);
- stimulating (contributes to the development of more rational methods of production and sale of goods).
The market price is set in three periods:
- in conditions of instant equilibrium, when the price depends solely on demand;
- in the conditions of short-term equilibrium, when demand can arbitrarily change in any direction;
- in conditions of long-term equilibrium, when the supply adapts to demand, as a result of which an equilibrium market price is formed.
If the market is in a situation where supply is less than demand for a product, then there is a shortage of it. Otherwise, there is an excess of goods on the market (a consequence of overproduction). A balanced (equilibrium) price allows you to adjust the quantity of goods on the market and achieve the maximum profitability of economic activity.
The market price is analyzed when comparing transactions between interdependent and independent entities. Moreover, a comparison can only be carried out on comparable transactions (made in the same financial and commercial conditions).
The market price can only take shape in the market of perfect competition. This is impossible in the conditions of the monopoly of individual sellers, price discrimination.
The formation of such a price is influenced by many factors (external and internal to the producer of goods).
In market conditions, the price is formed, first of all, under the influence of existing supply and demand for goods. Demand is a consumer-backed desire to purchase goods. The larger the number of products that enter the market, the lower the price is set for them.
An offer is the amount of goods sellers are willing to offer to a buyer under certain conditions. If there is a decrease in demand due to higher prices for goods, then supply, on the contrary, increases, which demonstrates the inconsistency of interest in the price of goods for sellers and buyers. For example, the market price of a bond (as opposed to the nominal) is set only under the influence of demand.
A feature of the free market is that, at a certain level of product supply, it itself strives for equilibrium. Upon reaching a correspondence between supply and demand, a market (fair) price spontaneously forms. But the balance is not static, it changes under the influence of various factors.
The level of market prices is affected by elasticity - an indicator of the change in demand for goods that occurs when prices for it change. An equally important factor is competition, forcing manufacturers to change prices for the goods they offer. Consumer behavior can also lead to price changes (the reaction of buyers of different segments to existing prices on the market). In addition to all of the above, it is necessary to take into account such a significant factor as state regulation of prices.