Market price

Origin of the equilibrium price

In business administration and economics, the market price is the price that is paid and achieved by market participants for goods and services in a market at a certain point in time .

General

As goods with a market price, raw materials , consumables and supplies ("RHB materials"), semi-finished products , intermediate products , finished products and commercial goods are particularly suitable. In addition to these material goods, there are also intangible goods such as receivables , goodwill , copyrights and related rights such as concessions , licenses , patents , trademarks , trademarks , registered designs or utility models . The market price of services is often referred to as a fee , fee , market interest rate or commission .

history

The mercantilist Richard Cantillon first distinguished between market price and natural price in 1755 . According to this, the market price depends on supply and demand and can temporarily be above or below the natural price because of market developments because it is difficult "to adapt the production of goods and food to use". At Cantillon, the natural price is the equilibrium price at which market equilibrium prevails. Adam Smith saw in his book The Wealth of Nations in March 1776 the cost of production as the basis of the market price, they corresponded to the natural price. For David Ricardo , on the other hand, in 1817 the market price was determined solely by labor costs , and demand had no influence on price formation. Like the Physiocrats, both differentiated between the short-term market price ( English market price , French prix courant ) and the permanent average price ( English natural price , French prix naturel ; natural price). In 1827, Jean Baptiste Say understood the market price to be “that amount of money by which a product can consistently be bought or sold”. He, in turn, realized that the market price shows the relationship between supply and demand.

The General Prussian Land Law (PrALR), which came into force in June 1794, required in Art. 353 PrALR that - if the market price or the stock exchange price is specified as the purchase price in the contract - "in case of doubt, this includes the current price, which is currently and at the place of fulfillment or at the relevant trading place for the latter according to the existing local facilities, .. “the mean price is to be understood. For the first time, it put the market price on the same level as the exchange price. In 1853, the lawyer Wilhelm Endemann defined the market price as the price “which is generally demanded and granted for a commodity in open trade (in commercial market or stock exchange transactions) at a certain time”. According to this, only the goods sold in the market or on the stock exchange have a market price. The ADHGB of May 1861 adopted the market price in Art. 357d ADHGB. The Reichsoberhandelsgericht (ROHG) defined the market price in a judgment of April 1871 as follows: “The market price of a certain place is ... the average price which, when comparing a considerable number of businesses closed in this place, turns out to be that of special personal relationships and other special circumstances of close of business represents the independent, common value of the goods concerned ”. Accordingly, it attributes the characteristics of representativeness and objectivity to the market price .

Market price in economics

The prerequisites for the market price are the homogeneity of the products / services, an active market with buyers and sellers willing to sell and publicly observable prices. Classical economics used the market price resulting from supply and demand as the opposite of the “natural price”. If too little or too much of a good is offered or demanded, the market price rises or falls above or below the natural price. In the case of oversupply , the market price tends to be lower than the production costs ; in the case of excessive demand, it rises above it. When setting prices , it can happen that a stable equilibrium is not established. The cobweb theorem describes a case in which the market price oscillates around the market equilibrium with increasing, constant or decreasing amplitude . The concept of the market price replaced notions of a fair price .

Equilibrium price

The market price can oscillate around the natural price , but must eventually reach its level again and again, because according to Adam Smith the natural price is the "central one towards which the prices of all goods constantly strive". This equilibrium price lies graphically in the market diagram at the intersection of the supply and demand curve . At the point of intersection there is a clearing of the market because the quantities offered and demanded match; this amount is the equilibrium amount . From the offer function

${\displaystyle x_{a}=f(p)}$

and the demand function

${\displaystyle x_{n}=f(p)}$

the following equilibrium function can be derived:

${\displaystyle x_{a}-x_{n}=0}$

There are: the supply quantity the demand quantity the market price. Correspondingly, if there is an oversupply, the price will fall towards the equilibrium price, and if there is excessive demand, it will increase accordingly. The equilibrium price also fulfills all price functions .
${\displaystyle x_{a}}$
${\displaystyle x_{n}}$
${\displaystyle p}$

calculation

From the point of view of price calculation , the market price is a demand-oriented price, which is calculated from the average revenue that can be realized in the market minus the total costs caused by the cost unit . The prime costs and the profit margin are the components of the imputed market price. Price tactical considerations such as the lower price limit can be taken into account. The retrograde calculation (also called back calculation) is based on the market price. The competitive pressure and well-informed buyers determine the market price, which cannot be influenced by the provider, so that he acts as a quantity adjustor. Based on the market price, the retrospective calculation ultimately results in the cost price at which production / further processing and subsequent sales are still worthwhile.

Market price in law

The market price is also a legal term , but there is no legal definition . The Federal Court of Justice (BGH) sees the market price as the customary local fee , i.e. the average price paid at the place of performance at the time of performance for certain goods of a certain class.

In commercial law , the market price is equated with the stock exchange price . Stock exchange prices are all stock exchange prices that are quoted for the securities ( securities exchange ) or commodities ( commodities exchange ) traded on an exchange . All other prices in an active market are market prices. However, if there is no active market on the basis of which the market price can be determined, the fair value must be determined using generally recognized valuation methods (Section 253 (4) HGB). The lowest value principle of Section 253 (4) of the German Commercial Code ( HGB) requires the use of stock exchange or market prices for current assets in order to determine the lowest value of an asset . Section 255 (4) HGB equates the fair value with the market price. As a result, both the stock exchange price and the fair value are equated with the market price under commercial law.

According to accounting law , the market price is a price that is paid (simultaneously) for assets comparable to the asset to be valued in an active market on the balance sheet date . Comparable here means that all price-forming parameters are largely the same, so that no adjustments to the observed price have to be made. An active market is characterized by the fact that largely homogeneous assets are traded at publicly accessible prices and buyers and sellers willing to enter into a contract can usually be found at any time. The market price is considered to be determined in an active market if it is easily and regularly available on a stock exchange , from a trader , from an industry group or from a supervisory authority and is based on current and regularly occurring market transactions between independent third-party market participants. If compensation is to be paid, the value of the goods is determined by the market price ( Section 429 Paragraph 3 HGB).

The Civil Code mentions the exchange or market price, especially in the recovery of collateral ( pledge : § 1221 of the Civil Code, § 1235 para 2 BGB, legal. Lien : § 1259 , lien on rights: § 1279 and § 1295 BGB).

If economic goods of a comparable type and quality are actually available on the market under tax law , the market price generally corresponds to the partial value .

meaning

The market price is used to evaluate the quantities of assets, so the following applies:

${\displaystyle {\text{Vorratsvermögen}}={\text{Bestand}}\cdot {\text{Marktpreis}}}$

The market price is therefore an indispensable value convention for the accounting that takes place after the inventory . In economics , the market price serves as the basis for calculating the economic indicators of the inflation rate , the gross domestic product or the price index .

Web links

• Market price - definition in the Gabler Wirtschaftslexikon
• Market price - short article by the Federal Agency for Civic Education on bpb.de.

Individual evidence

1. ↑ Richard Cantillon, Essay sur la nature de commerce en général , 1755/1931, p. 17 ff.
2. ^ Richard Cantillon, Essay sur la nature de commerce en général , 1755/1931, p. 17
3. ↑ David Ricardo, On the Principles of Political Economy and Taxation , 1817/1994, p. 325
4. ↑ Alfred Eugen Ott, Grundzüge der Preisheorie , 1997, p. 22
5. ↑ Jean Baptiste Say / Karl Eduard Morstadt, Detailed Presentation of the National Economy or the State Economy , Volume 1, 1830, p. 536
6. ↑ Jean Baptiste Say / Karl Eduard Morstadt, Detailed Presentation of the National Economy or the State Economy , Volume 1, 1830, p. 539
7. ^ Carl Koch, General Land Law for the Prussian States , Volume 3, 1863, p. 355
8. ^ Wilhelm Endemann, Textbook of Commercial Law , 1853, p. 270
9. ^ ROHG, judgment of April 13, 1871 Az .: Rep. 130/71, ROHGE 2, 194, 196
10. ↑ Gabler Wirtschafts-Lexikon, Volume 4, 1984, Col. 233
11. ↑ Wolfram Braun, The Organization of Economic Activities , 1987, p. 17
12. ↑ Eckart Karselt, The Cost Idea in Modern Theory , 1934, p. 6
13. ↑ Adam Smith, The Wealth of Nations , 1776/1982, p. 51
14. ↑ Horst Siebert / Oliver Lorz, Introduction to Economics , 2007, p. 52 f.
15. ↑ Ludwig G. Poth, Gabler Marketing Concepts from A - Z , 1999, p. 261
16. ↑ BGH NJW 2000, 1254, 1255 on the purchase contract
17. ↑ BGH NJW 1979, 758, 759
18. ↑ BT-Drs. 16/10067 BT-Drucksache 16/10067 of July 30, 2008, draft of a law for the modernization of accounting law , p. 61
19. ↑ BFH, judgment of July 29, 1965, Az .: IV 164/63 U

Please note the information on legal issues!