When a general supplier sends goods to a retailer or wholesaler. Generally, a minimum sales price will be agreed, that is, the merchants who take the goods shall not sell below the minimum sales price stipulated by them. This is to protect their own interests and prevent the sellers behind from tearing each other apart. If a seller sells at a price lower than the lowest price, then other buyers will think that your supplier is unfair in delivery, and giving others a low price will cause confusion. We won't even get the goods from this supplier then.

The lowest price is also called "protection price". Refers to the minimum price set by the government for imported goods, that is, when the price of imported goods is lower than the prescribed minimum price, import surcharge is imposed on them or imports are prohibited. This is a non-tariff protection measure. According to the requirements of the new valuation rules (signed by the Tokyo Round of GATT) that came into effect in 198 1, the lowest price valuation method is prohibited in GATT member countries. This is because the lowest price is a negation of the valuation system based on the transaction price, which violates the valuation principle established by the new regulations. However, in the new protocol of valuation laws and regulations, developed countries made concessions to developing countries on this issue, agreeing that developing countries should keep the lowest price during the transition period, so as to alleviate the contradiction of reduced fiscal revenue brought about by the implementation of new laws and regulations.

The government sets the lowest price (also known as the lowest price) to prevent the price from falling to a certain level, which may be due to the following reasons:

(1) Protect the income of producers. If the supply of an industry fluctuates greatly, or the demand of the industry is inelastic, then the change of supply is likely to cause serious price fluctuations, thus affecting the income of producers. The minimum price policy will prevent producers' income from falling due to low prices. For example, many countries set protective prices for agricultural products.

(2) surplus of manufactured goods. For some special commodities, such as grain, in order to avoid shortage, it is often necessary to store a certain amount. With the help of the minimum price, the government can store these goods in case of possible shortages in the future.

(3) Setting a minimum wage can prevent workers' income from rising to a certain level.

One of the problems in setting the lowest price is product surplus. If an enterprise has a surplus of products because of high prices, it will try its best to avoid price control and reduce prices. In many cases, the lowest price is not set by the government, but by different enterprises in a certain industry, so as to maintain high profits. At this time, individual enterprises will try to break the agreement and crush competitors.

Another problem brought by the lowest price policy is that high prices will cause inefficiency. When the profits of enterprises are maintained by high prices, they may not look for effective ways to reduce costs, thus hindering technological progress.