Definition: Price Discovery - Explained



The process in the free market where an item for sale by a seller aligns with a buyer at a specific price, and the asset becomes transacted -- is price discovery. This process of realization which may also be viewed as the price discovery mechanism, may occur continuously for more active market assets. Price discovery is common among speculative commodity markets.

For consumers, this discovery in-turn influences the pricing of many items, like clothing and apparel (cotton) the price of plastics (crude), the price of packaged coffee, and more.

Prices found in this way may fluctuate due to a host of unknowns.











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