price floor

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Related to Price Floors: Price ceiling, Consumer surplus

Price Floor

The lowest price for a good or service permitted by a government. A government may impose a price floor to protect a favored industry and/or to keep employees working at a reasonable wage. Price floors are particularly common in agriculture. Many economists believe setting price floors is economically inefficient and limits demand in the market, causing an oversupply of the controlled good or service.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

price floor

the minimum PRICE that can be charged for a PRODUCT as determined by the government. Contrast PRICE CEILING. See PRICE CONTROLS, PRICE SUPPORT, MINIMUM WAGE RATE, COMMON AGRICULTURAL POLICY.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
However, according to the LTA's February 20, 2019 report on the public consultation on establishing the price floor for on-net voice and data services and regulatory fee on Telecommunication goods and services, the new measures are aim at rebalancing the price and market stabilization.
The two GSM companies-Lonestar Cell MTN and Orange agreed with the new price floor for on net voice calls, a data services and the 5% regulatory fee.
Against this backdrop, the idea of a carbon price floor (CPF) is gaining prominence in the policy debate.
THE CASE OF THE CARBON PRICE FLOOR IN GREAT BRITAIN
The first question concerns whether price floors are serving their intended purpose--that of protecting the competitive process.
Section III discusses how price floors can be used strategically by rivals to peg downstream prices at artificially high levels and thereby realize a competitive advantage.
Supporters of large levels of production and exports wanted to stimulate the demand for exports by eliminating price floors. Others felt that the United States should reduce budgetary costs by using direct supply controls to raise farm prices.
There are two government prices: the target price, [P.sup.T], guaranteed to farmers, and the loan rate, [P.sup.L], which is a price floor defended by government stock purchases.
It thus follows that the incumbent provider's incentives to overstate its costs are unequivocal only when it (1) is perfectly myopic; (2) operates in no other markets where its incentives are to establish low price floors; or (3) believes that the comprehensive regulatory record of its cost structure established in prior proceedings will not be used by the regulatory authority in subsequent proceedings to determine whether it should be allowed to lower its prices to respond to a competing facilities-based provider.
(23) The incremental block of output that is appropriate for establishing competitive price floors will generally differ from the "entire quantity" of demand used to compute TELRIC estimates.
Note that the outcome of the two-part calculation is exactly the same as using the economic principle of adding together the LEC's incremental cost of toll and the contribution paid by its competitors.(26) The two approaches are mathematically identical so that the particular method used to calculate the imputed price floors is solely a choice based on convenience, not on different economic principles.
Whether particular price floor proposals promote economic efficiency depends on the circumstances particular to the business decision in question.