Price floor

Minimum prices are a political market regulation means. There are state -fixed prices, which may be not, but probably exceeded ( administered prices ).

Minimum prices are used to increase the incomes of producers of certain products to reduce the disposal of certain products or to prevent an assumed cut-throat competition.

For minimum prices in the labor market, see: minimum wage.

Economic impact

In economics, minimum prices are valued mostly critical. Two cases are distinguished:

A minimum price leads to ( compared to the market price) inflated prices for consumers. This contributes to the introduction of minimum prices to inflation. Especially with price intervention is (also at minimum prices ) had an influence on the course that have been made otherwise producer surplus and consumer surplus. In any case, the economic welfare of the market is minimized with minimum prices.

The excess supply leads to increased export and, where appropriate, to black markets where the relevant items are sold below the minimum price.

To avoid an excess supply, it is possible that the State imposes or realized further action. These could be:

• State occurs as a buyer
• Payment of decommissioning premiums to cause decline in supply
• Stimulating demand
• Forced the demand for acceptance

Other meanings

Takeover bids of listed companies

In voluntary takeover bids and mandatory bids, the buyer is obliged to submit an offer to purchase the remaining shares at a fair price.

The minimum price that the buyer has to offer, is governed by § 5 paragraph 3 of the Takeover Offer Regulation.

Auctions

With foreclosures, a minimum price is required ( the so-called " lowest bid "). Falling below this minimum price means that the bid is not valid.

Also on Internet auctions Write provider usually minimum prices before.