market pricing

Market Pricing refers to the process of establishing the market price.

In a market economy, this process is determined by the relationship between supply and demand, which is why the price resulting in a market equilibrium is called the market price. The price formation depends largely on the underlying market form:

  • Monopoly: In a supplier-side monopoly, the price is determined exclusively by the supplier. The customer only has the possibility to boycott a product by not buying it. An example of a quasi-monopoly was for a long time Microsoft, which had a quasi-monopoly for operating systems with Microsoft Windows.
  • Oligopoly: In a supply-side oligopoly, many customers meet few suppliers. An example of such an oligopoly is the German food retail sector, where the five largest suppliers control almost 80% of the market.
  • Polypoly: In a polypolistic market, prices are formed by the interaction of supply and demand. As there are many market participants on both sides, none of the market participants has market power. For this reason, the polypoly is often called the best marketable form. An example of a polypoly is the used car market, where millions of customers meet private and commercial suppliers.