Price Bands Systems

Price bands systems in Global Commerce Policy

In this regard, price bands systems is: mechanisms for the management of commodity prices. Two main varieties occur. The first is a mechanism maintained by some countries to ensure that the price on internal markets of mainly agricultural commodities is kept in a certain relationship to the international market price to afford domestic producers a measure of protection. The way this is done is that when the price of the imported product is high compared to the domestic price, the tariff is lowered. The entries on trade policy are here. If the imported price is low compared to the domestic price, the tariff is raised. Some have therefore described this kind of price band system as a variable tariff. The second variety of price band systems underpins the operations of buffer stocks. The simplest system consists of three bands, related to the market price of the commodity. When the price is low, the manager may buy. When it is at a medium level, the manager may buy or sell. When the price is high, the manager usually sells.[1]

Price bands systemsin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Price bands systems” entry (OAS)

See Also