Wholesale Price


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Wholesale Price

 

under socialism, the price at which an enterprise or marketing organization sells its production to other enterprises and organizations. The wholesale price reflects socially necessary expenditures of labor for manufacturing and marketing of production. It stimulates scientific and technological progress and improvement of the quality of products through a system of bonus discounts for quality.

A distinction is made between the enterprise wholesale price and the industry wholesale price. The enterprise wholesale price includes planned sector-average prime costs, which reflect outlays for the manufacture and sale of the given product as well as the normative profit. This profit standard is set at a level that will allow normally operating enterprises of the given sector to make established payments into a budget, to form an economic incentive fund, and to cover other costs. A variation on the enterprise wholesale price is the estimated price, used in certain sectors of industry, which takes into account differences in the conditions faced by individual enterprises in producing a given output.

The industry wholesale price for consumer goods differs from the enterprise wholesale price by the sum of the turnover tax plus deductions for the maintenance of sales organizations; prices which include free delivery must cover the cost of delivery as well.

Since wholesale prices include the costs of transporting production from the factory to the place of consignment, wholesale prices of either the free-delivery type (transportation paid by the supplier) or freight-paid type (transportation paid by the consignee) are used. In certain sectors, such as the garment industry, the wholesale price is determined by deducting trade markups from the retail price.

Wholesale prices may be applied on either a permanent, temporary, one-time, or stepped (sliding) basis. They are used in planning and accounting when it is necessary to express the volume of production, labor productivity, production costs, and the effectiveness of capital investments and new technology in monetary terms. Wholesale prices for products of the same type are uniform for the entire country, but zonally differentiated prices are established for certain products, such as lumber, coal, and ores.

In the course of the economic reform in 1966, the problem of making wholesale prices approximate the socially necessary outlays for industrial production was basically solved. The unprofitability of a number of branches of the mining industry was eliminated, and the number of enterprises permitted by plan to operate at a loss was reduced. New wholesale prices were introduced in most sectors of light industry and the food-processing industry in late 1966 and early 1967. On July 1, 1967, new prices were introduced in all branches of heavy industry. The overall index of enterprise wholesale prices rose by 9 percent in comparison with 1966, including increases of 17.5 percent in heavy industry. The corresponding rises in industry wholesale prices were 7 percent and 15 percent. Wholesale price indexes for light industry and the food-processing industry in 1967 remained practically the same as before.

Changes in wholesale prices in 1966–67 were effected without raising the retail prices of consumer goods. Prices of tractors, agricultural machinery, and mineral fertilizers sold to kolkhozes and sovkhozes were also maintained at the same level. Industry wholesale prices are currently 37 percent lower than in 1949; enterprise wholesale prices are 24 percent lower. Compared to 1940 the overall level of industry wholesale prices in 1972 was higher by 33 percent, including increases of 12 percent in heavy industry, 84 percent in light industry, and 46 percent in the food-processing industry. (For changes in wholesale prices from 1965 to 1972 see Table 1.)

The overall level of wholesale prices is approved by the Council of Ministers of the USSR, as are changes in the overall level. Depending on the nature and economic value of the product involved, specific prices are authorized by the State Committee on Prices and its organs, by the councils of ministers of the Union republics, and by certain Union ministries.

Wholesale prices are also used in foreign socialist countries. On the whole, although there are certain differences, they fulfill the same functions as in the USSR. Industry wholesale prices in the USSR correspond to wholesale prices with the same designations in the German Democratic Republic (GDR), the Mongolian People’s Republic (MPR), and the Rumanian Socialist Republic (RSR). Soviet wholesale prices for industry also correspond to market prices established in the People’s Republic of Bulgaria (PRB) and the People’s Republic of Poland (PRP) for certain types of producer goods and for consumer products sold by marketing and supply organizations. Industrial enterprises in the GDR, the MPR, and the RSR sell their production at enterprise wholesale prices; in the PRB and the PRP, enterprise wholesale prices are referred to as factory and mill prices, and in the People’s Republic of Hungary, simply as wholesale prices. Sector-average prime costs and a defined rate of profit constitute the basis for enterprise wholesale prices in member countries of the Council for Mutual Economic Assistance.

In capitalist countries wholesale prices are used in exchanges between manufacturers and wholesalers and between wholesalers and retailers. Producers’ prices, that is, prices set by manufacturing enterprises, firms, and corporations, are close to wholesale prices. They are based, as a rule, on the production costs of a given enterprise, warehousing expenditures, interest on credit and fixed charges, marketing costs for the shipping, verifying, testing, and regulating of the product, advertising costs, and profit. Wholesale prices of successive links in the chain of production and marketing include the wholesale prices of the preceding link as a basic component.

The average annual growth rate of the wholesale price index in developed capitalist countries between 1957 and 1970 was 1.5 percent; in 1970–72 it rose to 2–2.5 percent. Under the impact of inflation, wholesale prices for industrial commodities increased

Table 1. Changes in the structure of industry wholesale prices (percent)
 19651972
 All industryHeavy industryFood-processing and light industryAll industryHeavy industryFood-processing and light industry
Industry wholesale prices ....100100100100100100
Components of industry prices..      
Costs of industrial enterprises and marketing organizations.74.781.367.673.576.869.1
Profits of industrial enterprises and marketing organizations ........9.411.67.113.617.58.7
Turnover tax..........15.97.125.312.95.722.2

in 1972–73 by more than 30 percent in the United States in comparison with 1963, with corresponding increases of more than 20 percent in the Federal Republic of Germany, nearly 40 percent in Italy, and 25 percent in Japan.

G. I. KABKO, V. E. RYBALKIN

References in periodicals archive ?
The change of Wholesale Price Index in the First quarter 2014 is traced back to an increase in the prices of Agricultural goods by 1.69%, Manufacturing group by 0.30% and the Fishing products by 8.01%, while the prices of the Mining and quarrying decreased by 5.40%.
As stated above, for an incumbent supplier who faces with a competitive supplier, if he wants to win the competition with his competitor, he needs to give a wholesale price that is lower than (or at least equal to) his competitor's counterpart, while this lower wholesale price may lead to a loss in his profit from the current deal.
Petrol averaged 132p at the start of the year, "and this is where it should be heading if the wholesale price collapse persists", the report said.
Peanuts, the most sought after item of winter, is available at Rs 250-300 per kg at push cart owners' shops while its wholesale price is Rs 180-200 per kg which was Rs 150 per kg last year.
The bulletin pointed out that the wholesale price for the agricultural products recorded 9.4% in the first quarter of 2010 due to hike in the prices of fruits and live animals by 18.8% and 14.8% respectively.
The chart below, "Impact of Average Wholesale Price Changes," illustrates the possible impact on a sample plan sponsor.
Japan's wholesale prices in fiscal 2009 dropped 5.2 percent from a year earlier, matching the previous record fall, led by declines in prices of oil and steel, the Bank of Japan said Tuesday, underscoring heightened deflationary pressure in the country.
In the first quarter of 2010, Austria's wholesale prices were up 1.6% on the year.
"After three years of engagement with Ofcom, we now look forward to a judicial process which will apply impartial analysis and clear legal standards." Ofcom has set a wholesale price of pounds 10.63 per subscriber per month for each of Sky Sports 1 and 2 when sold on a stand-alone basis, 23.4% below the current wholesale price to cable operators.
Summary: Sky must offer its premium sports channels to other broadcasters at a wholesale price set by Ofcom, the broadcasting regulator has ruled.
Wholesale Price Index Increased (WPI) by 0.99% and Producer Price Index (PPI) by 1.51% during the Fourth quarter 2009 compared with the Third quarter, in the Palestinian Territory, Palestinian Central Bureau of Statistics (PCBS) said.<p>It indicated that there was increased in the price index for the Palestinian Territory with its 2007 base year (2007=100) as.
Around 2,000 tons of honey will be yielded in 2009, said Sergey Tikhonov, Chairman of the National Society of Beekeepers on Tuesday.Sergey Tikhonov said the wholesale price for price may total 130-150 som per a kilo.

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