Price Equalization Mechanism

Price equalization mechanism in Global Commerce Policy

In this regard, price equalization mechanism is: a mechanism designed to ensure that market prices for commercially produced and traded commodities, and therefore returns to their producers, do not fluctuate excessively. This aim is seen as promoting the orderly development of the industry by assuring producers of more predictable remunerative returns. The entries on trade policy are here. At the same time, it is thought to benefit consumers who can look forward to modest price changes at any one time. Such mechanisms operate in many different ways. The main challenge for all of them is to ensure that it does not turn into a subsidy. This can be done if the producers are responsible for the funding of the mechanism. The entries on trade policy are here. In this way, price signals will not be ignored. See also buffer stocks, common agricultural policy, floor price, international commodity agreements and price band system.[1]

Price equalization mechanismin the wold Encyclopedia

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

Resources

Notes and References

1. Dictionary of Trade Policy, “Price equalization mechanism” entry (OAS)

See Also