Research on Price Formation Based on Resource Optimization Allocation

Yan Feng () and Shulin Liu
Additional contact information
Yan Feng: School of Economics, Wuhan University of Technology, Wuhan 430070, China
Shulin Liu: School of Economics, Wuhan University of Technology, Wuhan 430070, China

Sustainability, 2024, vol. 16, issue 12, 1-20

Abstract: Global economic growth has weakened under the guidance of equilibrium price theory, which focuses on price competition. Therefore, developing a price formation mechanism that aligns with sustainable economic development is imperative. Based on a scientific definition of the boundaries of the constituent factors of wealth creation, this paper proposes a price formation mechanism centered on resource optimization allocation and constructs a price measurement model using the Leontief input–output analysis method. To test the price formation mechanism, this paper uses panel data from 31 provinces in China from 2003 to 2020 to overcome the limitations of single-year data, and the 2020 input–output table of China to calculate the product prices for 153 sectors (covering the entire industrial system) at the average social production level in 2020. These estimated prices are then compared with the approximate market prices of 72 sector products for the same year. The research shows that the following: (1) The price is determined by the techno-economic relationships among the labor, land, technology, and capital that constitute a commodity. It can objectively and fairly reflect the value information of the factors and the quantity of factors embedded in the commodity. (2) The balance and degree of deviation between the price measured by the techno-economic relationships among a commodity’s constituent factors and the market price of the sector’s products depend on effective market competition centered on commodity quality. Price, through the market’s effective competition mechanism, will incentivize and guide resources towards enhancing labor skills, technological upgrades, and the development of new technologies, products, and markets, thereby achieving sustainable economic growth.

Keywords: economic sustainable development; resource optimization allocation; effective market competition; price (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/12/5129/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/12/5129/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:12:p:5129-:d:1415967

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().