What is the impact on the price?

The price impact is the result of market activity, which is often overlooked. It is a measure of how much transaction it will change the prevailing prices on the market. These are concerns for people who buy or sell in large quantities because their steps contribute more to the aggregated supply and demand than the average participant. This assumption is one of the basic principles of models of perfect competition, which also assumes an endless number of market participants. There is a seller on a perfectly competitive market whenever you want to buy a product. A large product order stimulates demand, increases the price, while a large offer for sale reduces the price. Participants in the market with significant power on the market must take into account these consequences in decision -making. Price changes can affect other aspects of their business or future actions in the same area.

the most beautiful potentialD The impact of the price occurs in the markets dominated by monopolies. In these cases, one company has full price control because it is the only producer. If he wants to sell at higher prices, he produces fewer items and creates a deficiency so that people are willing to pay more. This puts customers at the disadvantage of their own profit, which can do because it holds all the strength on the market.

However, the effect is not limited to monopoly markets or even small markets. Although some of the lines are approaching, there are no perfectly competitive markets. It may seem that you are the recipient of the price because you go to the store, see the published price and decide whether to buy or not. However, consumers have power and a joint effort to boycott the product can have sufficient impact on demand to change the price. Each individual has a certain impact on the price, but the result is generally not measurable until individuals combine forces.

The price impact is not limited to consumer markets. Financial markets are particularly affectedThey are arrested by a price impact, because they are dominated by large investors. Sometimes they are rich individuals who hold many shares of one asset. More often, however, they are institutional investors - fund managers who invest on behalf of all their clients. The large amount of funds they invest give them the power to change stock prices with a single sale or offer.