Upstream price
Encyclopedia
Upstream price is an economic term that refers to the price of main inputs of production (for processing/manufacturing etc.) or prices quoted on higher market levels (e.g. wholesale markets). Upstream prices are the prices paid by producers (as opposed to consumers
), and are directly related to the cost of production
.
In contrast, downstream prices are the prices paid by consumers at the retail level. The relationship between upstream prices and downstream prices is largely explained by asymmetric price transmission
.
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
), and are directly related to the cost of production
Cost-of-production theory of value
In economics, the cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it...
.
In contrast, downstream prices are the prices paid by consumers at the retail level. The relationship between upstream prices and downstream prices is largely explained by asymmetric price transmission
Asymmetric price transmission
Asymmetric price transmission refers to pricing phenomenon occurring when downstream prices react in a different manner to upstream price changes, depending on the characteristics of upstream prices or changes in those prices.The simplest example is when prices of ready products increase promptly...
.