Price Management and Institutional Context

Abstract

In the previous chapters, we have looked at price decisions without taking the institutional or economic context into account. For example, we have proceeded as if there were no inflation or deflation. The reality is that such phenomena exist, and the question is whether and to what extent they influence the optimal price. Internationalization also poses special challenges to price management. The market environment typically differs from country to country due to trade practices and consumer preferences. Domestic markets can be partially protected by tariffs, trade barriers, and different currencies. This chapter deals with the effects which inflation and deflation, foreign exchange, and internationalization have on price.