Price Differentiation

Differentiation, Price


the establishment of various levels of prices existing in the USSR for the same kind of goods in connection with expenditures related to economic, natural, territorial and other differences not dependent on individual enterprises and also in connection with the quality of production (such as grade, class, and type).

In industry, the wholesale prices of enterprises are differentiated especially widely. Often a different level of production cost for the same items at different enterprises depends not on the economic activity of the enterprises themselves but is associated with their geographic location, natural factors, and other objective causes. This applies above all to such industries as coal, peat, lumbering, and cement, where wholesale prices must reflect difference in the expenditures of enterprises attributable to the diverse natural conditions of individual regions, basins, deposits, and so on. Uniform wholesale factory prices are established for the users of the output of these industries (sometimes taking account of zonal differences), whereas differentiated accounting prices are set for producer enterprises, based on the planned prime cost of the output at a given enterprise or among a group of enterprises that have homogeneous production conditions.

In several of the extractive sectors (such as coal and iron ore), a zonal differentiation of wholesale prices, reflecting differences in levels of socially necessary expenditures in individual zones (or regions), is employed. In agriculture, as a result of great differences in soil, climatic, and economic conditions of the production of the most important agricultural products (grain, sunflowers, sugar beets, potatoes, vegetables, livestock products), purchase prices are differentiated by Union republics, geographic regions, or zones, based on the average zonal expenditures for the production of output. The differentiation of purchase prices is one of the important tools for leveling out economic conditions and the revenues of kolkhozes and sovkhozes that work under unequal natural-economic conditions. Moreover, purchase prices are differentiated on the basis of the quality of output. For instance, in consideration of the high milling and baking qualities of hard wheats, the purchase prices for them have been set 40 percent higher than for varieties of soft wheats; beer barley is priced 20 percent higher than feed barley; purchase prices for milk are differentiated (with the aid of markups and markdowns) on the basis of fat content, acidity and other quality indexes. Purchase prices for potatoes, vegatables, melons, fruits, meat, and some other foodstuffs are also differentiated with consideration of the seasonal conditions of the production and sale of output.

An important feature of state retail prices for consumer goods is their stability and consistency for the same goods, which ensures a uniform purchasing power for the ruble. For most industrial goods (such as fabrics, footwear, clocks and watches, refrigerators, radios, washing machines, sewing machines, and cameras), uniform retail prices exist for the entire country. However, for certain commodities it is necessary to take account of different levels of production costs in individual regions, as well as the difference in outlays for transportation if they constitute a sizable share of the commodity’s prime cost. Therefore, in addition to unified all-Union retail prices, zonal retail prices are used (differentiated by zones of the country), chiefly for foodstuffs—cereal products, meat products, fish products, sugar, confectionery, salt, canned goods, and the like—and for some difficult-to-transport industrial commodities, such as furniture, lumber, and window glass. For most of these commodities three price zones have been established in the USSR. The lowest prices are established for the first zone, which includes regions of mass production of the given commodity, with a low level of costs for its production and shipment. Zonal price differentiation changes with a change in the location and conditions of production and marketing of commodities in the country’s individual regions.


References in periodicals archive ?
However, the expansion of global eyewear market is hindered by barriers to entry and price differentiation.
The growth of the industry can be hindered by price differentiation between branded and unbranded frames, sale of illegal novelty contact lenses, and the challenging local conditions in various countries.
We know from mature markets that intelligent offer and price differentiation can increase profits by up to 30 per cent.
The growth of the industry is hindered by sale of illegal novelty contact lenses, price differentiation between branded and unbranded frames and changing local conditions of various countries.
A single cargo may have a market value of around NOK 250 million, which means that even small price differentiation between markets can result in substantial added value for Statoil.
The assumed price differentiation between product qualities had a major influence on the impact of the errors.
As a result, there is considerable price differentiation in farmland, even locally.
The debate has progressively shifted and focused on several key issues that are essential to the design of a well-functioning neutrality: (i) traffic management, (ii) IP interconnection arrangements, (iii) transparency, (iv) price differentiation and markets for enhanced quality, and (v) the setting up a suitable regulatory framework.
Such price differentiation, prima facie, violates Section 3(3)(b) of the Act which prohibits price discrimination by charging different prices for the same services from different customers in the absence of objective justification that may justify different prices.
One notable element of the latest Landmark Advisory price maps for Dubai is the continual refinement of price differentiation, which was previously based on factors such as location, views and the quality of finishing.
Only a detailed measurement of elasticities for the credit union's key customer segments and for each product will enable true, value-based price differentiation.
We are repositioning them so there is more of a price differentiation and a look differentiation between Royal Doulton and Wedgwood," Scala said.