Economic content of world and domestic prices. The essence of the price, the concept of world and national prices.
Let's start with the theoretical basis of the concept of "price", what is it? Price is one of the main economic categories. Historically, it was formed in the process of origin and development of exchange. In general terms, price is a monetary expression of the value of goods. There are several definitions of this concept:
- A form of expression of the value of goods that manifests itself in the process of their exchange;
- The amount of money for which the buyer is willing to buy the goods and the seller is willing to sell them.
The essence of the price is that it reflects the value of goods, services, securities or assets in money equivalent, expresses the assessment of labor costs and the cost of materials. The price serves as a starting point for planning the financial activities of an enterprise.
The price of the goods is determined by the seller on the basis of various factors that we will consider in point 1.2. It is one of the key factors in making a decision to buy the goods. Price is a regulator of economic processes, including production, distribution, exchange and consumption of goods, provision of services, purchase and sale of goods to consumers. And all prices together represent a single price mechanism.
There are many types of prices that are classified according to one or another criterion. According to the theme of this paper, we will be interested in the criterion - depending on the sphere (level) of functioning. This category includes world and domestic prices. In general sense, national prices are designed to ensure the functioning of the national economy. Their scope of action extends only within the country.
Domestic prices are formed taking into account the peculiarities of all sectors of the national economy and the requirements of the domestic market of the country. Domestic price - the price of sale of goods, services in the country of their origin or production, most fully reflecting their situation.
Prices of world markets mediate the activity of world markets and are formed taking into account their requirements. National prices are determined by the ratio of supply and demand. Demand for goods sets the most acceptable price that firms can set. Gross production costs determine its minimum value. The exception is state intervention, which in some cases may introduce upper and lower price thresholds. The price is significantly influenced by the behavior of competitors, prices of their products, quality of goods, solvency of the population, inflation rate in the country, etc.
In the world commodity market, trade operations are carried out on the basis of world prices. Application of external prices is conditioned by different prices for the same type of products in different countries. World prices are a monetary expression of the international value of goods sold in the world commodity market. What is this international value? Socially necessary labor costs for the production of goods under the average world socially normal conditions of production and the average global level of labor productivity.
Of course, the process of external price formation is a complex one. Therefore, in practice, the world recognizes the price for a certain type of raw materials, products and goods, on the basis of which significant volumes of these products are sold in international trade, taking into account the payment in a freely convertible currency.
The following five attributes characterize the world price:
1) These should be the prices of large regular transactions in international trade, which are not sporadic;
2) Transactions shall be commercial in nature;
3) Transactions shall be in a hard currency that is freely convertible;
4) Transactions shall be export or import transactions;
5) Export or import transactions shall be in free markets.
External prices shall include:
- The actual prices of major export or import transactions that take place in the major markets for the commodity;
- Estimates recognized for a fixed period of time by organizations engaged in international trade;
- Valuations of transactions that are of a constant nature in the world commodity market;
- average prices for the same type of goods calculated on transactions of different countries' markets. Let us briefly consider the classification of world prices by presenting it in a tabular format.
Classification of types of prices on the world market.
External prices serve trade transactions between countries and large firms from different countries.
Prices of the main exporting countries determine the level of world prices for different raw materials. I will give you a couple of examples: oil - oil prices in the USA, Russia, Saudi Arabia; wheat - export prices in Canada, etc.
In terms of finished goods, the prices of the world's leading producers play the main role in the formation of the world price level, which specializes in their production and sale. As a rule, these are transnational companies. The process of determining the world price of raw materials is not difficult, as it involves an average of 2-3 indicators. While the establishment of the price level for finished products is more difficult (approximately 10-20 indicators). This is due to the significant number of firms selling the same type of products.
In practice, export and import prices of the main sellers and buyers of the respective goods are used as world prices.