Administered Pricing

Summary of Administered Pricing

A condition in which the prices of certain goods and/or services are determined by governmental authority, supplier cartels (legal or illegal), or trade associations, and not by market forces. The purpose of administered pricing is to eliminate price competition or to maintain price stability over time. Examples of administered pricing include: price controls imposed by government during periods of shortage or high inflation; setting of rates or fares; and collusion among suppliers and importers to ensure market prices do not fall below agreed levels.

(Main Author: William J. Miller)

Administered Pricing and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Administered Pricing: A condition in which prices of certain goods or services are determined by government agencies, producer cartels, or industry associations, rather than freely through market forces. Examples include price controls imposed by governments during periods of short supplies or high inflation; setting of shipping rates or fares; and collusion among suppliers or importers of a commodity to maintain price stability.