An administered price is in general a price which is either set (fixed) by legal statute or by a standard procedure formulated as an official policy, instead of being determined directly by supply costs and market demand. Even if supply and demand conditions change, the administered price may therefore stay the same, or it may change in the opposite direction - if e.g. demand falls, the administered price is kept the same or raised, to subsidize the supplier and protect his income, or alternatively the price is kept constant to protect the consumer/purchaser.

In the United States

In the U.S. administered prices are fixed by policy makers in order to determine, directly or indirectly, domestic market or producer prices. All administered price schemes set a minimum guaranteed support price or target price for a commodity, which is maintained by associated policy measures such as quantitative restrictions on production and imports; taxes and tariffs on imports; export subsidies; and public stockholding.

For example, administered prices under the 2002 farm bill (P.L. 107-171) include loan rates and/or target prices, and price support levels for sugar, and dairy products.

In Europe

In Europe, an administered price is defined either either a price legally set by a government authority, a (heavily) subsidized price, or an oligopolistic price set by large corporations who command a large share of the market for their products and services.

In the USSR, China and Cuba

In socialist societies, an administered price is defined as a price set by the government planning authorities, which contrasts with a market price that can vary according to supply and demand. In a Soviet-type planned economy, most prices for important resources are officially fixed by the state, and adjusted according to state policy.

In Heterodox economics

In heterodox economics

Heterodox economics

"Heterodox economics" refers to approaches or to schools of economic thought that are considered outside of "mainstream economics". Mainstream economists sometimes assert that it has little or no influence on the vast majority of academic economists in the English speaking world. "Mainstream...

, it is argued that it is a myth that most prices are determined "by the market". Instead, price levels reflect a mix of market-pricing and administered pricing, and large corporations operate their own internal price regime. Since direct and indirect taxes plus other government levies can amount to anywhere between 20% and 40% (or more) of final selling prices of goods and services, it is argued that a large component of final prices is not determined by the market. Thus, in any real economy, there is a "mix" of market prices, administered prices and combinations of the two.