World market price

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In foreign trade, the world market price is understood to mean either the price of a good prevailing on world markets (especially for standardized goods) or the price at which individual suppliers offer a certain product internationally. In relation to the second definition, exporting nations are characterized by the fact that the price of the good in that country is usually below the world market price. If a few suppliers / producers together have the world monopoly , they also determine the world market price. The pricing is based on the interplay of supply and demand. The price itself is usually an average value that is influenced, for example, by commodity futures exchanges (e.g. oil , gold , silver , platinum , palladium price ).

meaning

In any case, world market prices have a direct influence on the competitiveness of a country or a company. If the country in question is limited in production to a few goods (e.g. coffee, sugar, tobacco), a particular dependence on the world market price arises, which in turn can lead to national economic crises.

In crisis situations some countries try to lower the asking price of their products by devaluing their domestic currency . However, since the competitiveness of foreign providers is falling, one speaks of a beggar-thy-neighbor policy .

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