Optimal pricing at aerospace corporation as the main factor

Y. V. Vlasov (), A. A. Chursin () and V. P. Korneenko ()

Russian Journal of Industrial Economics, 2016, issue 4

Abstract: In modern conditions of financial and economic instability, consumer prices growth and tariffs, the Russian aerospace industry enterprises faced the challenge of finding new ways of maintaining price level providing product competitiveness on the market while saving its quality and reliability. The article suggests the applied method of calculating the optimal rate of profitability of gross income taking into account the elasticity of demand on aerospace product market. The developed method allows to calculate the optimal rate of profitability, ensuring, on the one hand, the competitiveness of products by price, and on the other hand, the income of enterprises, which can be invested it its innovative development. It is shown that it is convenient to plan the maximum profit from sales of products in vertically integrated corporations during transfer pricing and then to distribute to suppliers which are integrated into the structure. With this approach, the state budget also receives the maximum tax revenues. The article presents a model for calculating optimal rates of profitability of gross income given wholesale components cost for the parent company in terms of elasticity of demand; an example of calculating the optimal rate of profitability of gross income; non-linear tax mechanism for controlling the growth of prices of suppliers, that are not involved in a vertically integrated corporation.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ach:journl:y:2016:id:489

DOI: 10.17073/2072-1633-2015-4-77-85

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