第324页 XVI. Prices

1. The Pricing Process
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The recurrence of individual acts of exchange generates the market step by step with the evolution of the division of labor within a society based on private property....The multiplication of the acts of exchange and the increase in the number of people offering or asking for the smae commodities narrow the margins between the valuation of the parties. Indirect exchane and its perfection through the use of money devide the transaction into two different parts: sale and purchase....The divisibility of money,  unlimited for all practical purposes, makes it possible to determin th exchange ratios with nicety. THE EXCHANGE RATIOS ARE NOW AS A RULE MONEY PRICES. They are determined between extremely narrow margins: the valuations on the one had of the marginal buyer and those of the marginal offerer who abstains from selling, and the valuation on the other hand of the marginal seller and those of the marginal potential buyer who abstains fom buying.
Profit-seeking speculation is the driving force of the market as it is the driving force of production.
All the prices we know are past prices. They are facts of economic history. In speaking of present priceswe imply that the prices of the immediate future will not differ from those of the immediate past. However, all that is asserted with regard to future prices is merely an outcome of the understanding of future events.
Apart from such prices negotiated in exchange and from prices of commodities the homogeneity of which can be precisely established by technological analysis, it is a serious bludn to disregard differences in the quality of the commoditi in question.... A comparison of prices of consumers' goods is mainly misleading on account of the difference in quality.
2. Valuation and Appraisement
The ultimate source of the determination of prices is the value judgements of the consumers. Prices are the outcome of the valuatuon preferring alpha to beta. They are SOCIAL PHENOMENA as thery are brougt about by the interplay of the valuations of all individuals participating in the operation of the market.
Appraiseent must be clearl distinguished from valuation. Appraisement in noway depends upon the subjective valuation of the man who appraises. He is not intent upon establishing the subjective use-value of the good concerned, but upon anticipating the prices which the market will determine. VALUATION IS A VALUE JUDGEMENT EXPRESSIVE OF A DIFFERENCE IN VALUE. APPRAISEMENT IS THE ANTICIPATION OF AN EXPECTED FACT. 
Valuation and appraisement are, however, closely connected....The valuations of a man buying and selling on the market must not disregard the strutureof market prices; they depend on appraisement....it always aims finally at the comparison of alternative modes for the removal of felt uneasiness.
Demand and supply are the outcome of th conduct of those buying and selling. 
Furthermore it is important to realize that we do not have any knowledge or experience concerning the shape of these curves. Always, what we know is only market prices---that is, not the curves but only a point which we interpret as the intersection of two hypothetical curves. 
3. The Prices of the Goods of Higher Orders
The market process is cohenrent and indivisible. It is an indissoluble intertwnement of actions and reactions, of moves and countermoves. But the insufficiency of our mental abilities enjoins upon us the necessity of dividing it into parts and analyzing each of these parts searately. In resorting to such artificial cleavages we must never forget that the seemingly autonomous existence of these parts is an IMAGINARY MAKESHIFT of our mind.
The prices of the goods of higher orders are ultimately determined by the prices of the goods of the first or lowest order, that is, the consumers' goods. As a consequence ofhis dependence they are ultimately determined by the subjective valuations of all members of the market society....The factors of production are appraised with regard to the prices of the products, and from this appraisement their prices emerge. NOT THE VALUATION BUT THE APPRAISEMENT are transferred from the goods of the first order to those of hiher order.
Valuation as it can be practised by an isolated actor can never result in a determination of such a thing as quotas of value. Valuation can only arrange goods in scaales or preference. It can NEVER attach to a good something that could be called a quantity or magnitude of value.
It is only the market that, in establishing prices for each factor of production, creats the conditions required for economic calculation. Economic calculation always deals with prices, never with values.
 
4. Cost Accounting
Cost accountingis therefore ot an arithmetical process which can be established and examined by an indifferent umpire. It does not operate with uniquely determined maginitudes which can be found out in an objective way. Its essential items are the result of an understanding of future conditions, necessarily always colored by th entrepreneur's opinion about the future state of the market.
5. Logical Catallactics Versus Mathematical Catalactics
 Vs Econometrics / Statistics: 
Experience of economic hostory is always experience of complex phenomena. It can never convey knowledge of the kind the experimenter astract from a laboratory experiemnt. Statistics is a method for the presentation of historical facts concerningprices and other relevant data of human action. It is not economics and cannot produce economic theorems and theories.
 
Vs The Relation of Prices and Costs: 
In dealing with these problems the mathematical economists disregard the operation of the market process and moreover pretend to abstract from the use of money inherent in all economic calculations. However, as they speak of prices and cost ingeneral and confront prices and costs, they tacticly imply th existence and the use of money....It cannot be denied that all investigations concerning the relation of prices and costs presupposes both the use of money and the market process. But the mathematical economists...formulate equations and draw curves which are supposed to describe reality.

Vs. Solving Catalactic Problems Without Reference to The market Process
There is no need to explain again why this analogy is superficial and misleading and in what respects purposive huamn action radically differs from motion.
A sound economic deliberation must never forget these two fundamental principles of the theory of value: First, valuing that results in action always meas preferring and setting asie; it never means equivalence. Second, there is no means of comparing the valuations of different individuals or the valuations of the same inividuals at different instants other than by establishing whether or not they arrange the alternatives in  question in the smae order of preference....he mathematical economists disregard the whole theoretical elucidation of the market process and evasively amuse themselves with an auxliliary notion employed in its context and dvoid of any sense when used outside of this context. 

Both the logical andthe mathematical economists assert that human action ultimately aims at the establishment of such a state of equilibrium and would reach it if all further changes in data were to cease. But the logical economist knows much more than that. He shows how the activities of enterprising men, the promoters and speculators, tend toward eradicating such discepancies and thereby also toward blotting out the sources ofentrepreneurial profit and loss. He shows how this process would finnaly result in the establishmet of the evenly rotating economy. THIS IS THETASK OF ECONOMIC THEORY.
6. Monoply Prices
The special condition and circmstances required for the emergence of monopoly prices and their catlactic features are:
1. There mut prevail a monopoly supply.
2. Either the monopolist is not in a position to DISCRIMINATE among the buyers or he voluntarily abstain from such discrimination.
3. The reaction of the buying public to the rise of in prices beyond the potential competitive price, the fall in demand, is not such as to render the proceeds resulting from total sales at any price exceeding the competitiveprice smaller than total procrrds resulting from total sales at the competitive price.
Monoply is a prrequisite for the emergenceof monoply prices, but it is not the only prerequisite. There is a further condition required, namely a certain shape of the demand curve.
4. Disregarding the problem of discrimination, a definite price is either a competitive price or a monoply price.
Mer limitation of supply is the source of economic value and of all prices paid; as such it is not yet suffcient to generate monoply pices. 
6. The monoplist does not know beforehand in what way the consumers will react to a rise in prices. He must resort to trial and error in his endeavors to find out...
8. Duopoly and oligopoly are not special variety of monopoly prices, but mere a variety of the methods appled for the establishment of a monoply price. 
10. Marginal monopoly need not always owe its appearance to an institutional factor such as tariffs. It can be prodced by sufficient differences in the fertility or productivity of some factors of production.
It has already been said that it is a seriou blunder to speak of a land monopoly and to refer to monopoly prices and monopoly gains in explaining theprices of agricultural products and the rent of land. As far as history is confronted woth instances of monopoly prices for agricultural products, it was license monopoly fostered by government decree.
11. It has been asserted again and agin that the economies of big-scale production have geneated a tenency toward monopoly prices in the processing industries. Such a monopoly would be called in our terminology a margin monopoly.
7.Good Will
It must be emphasized again that the market is peopled by men who are not omniscient and have only a more or less defective knowledge of prevailing conditions.
Good will is the renown a business aquires on account of past achivements. It implies the expectationthat the bearer of the good will in the future will live uo to his earlier standard.... It does not matter whether the good will is based on real achievements and the merits or whether it is only a product of imagination and fallacious ideas. What counts in human  action is not truth as it may appear to an omniscient being, but the opinion of people liable toerror. 
8. Monopoly of Demand
Monopoly prices can emerge only from a monopoy of supply. A monopoly of deman does not bring about a market situation different from that under not monopolized demand.
9. Consumption as Affcted by Monopoy Prices
10. Price Discrimination on the Part of the Seller
Both competitive prices and monopooly prices are the same for all buyers. There prevails on the market a permanent tendency to eliminate all discrepancies in prices for the same commodity or service. 
But there can appear on the market conditions which make it possible for the seler to discriminate between the buyers. He can obtain prices which may sometimes even rise to the point at which the whole consumers' surplus of a buyer disappear. Two conditions must coincide in order to make price discrimination advantageous to the seller.
1. those buying at a cheaper price are not in a position to resell the commodity or the service to people to whom the discrimnating seller sells only at a higher price.
2. the public does not react in such a way that the total new proceeds of the seller lag behin the total net proceeds he would obtain under price uiformity.
11. Price Discrimination on the Part of the Buyer
12. The Connexity of Price
13. Prices and Income
A market price is not derived from th general price structure or from the structure of the prices of a special class of commodities or services. What is called the price structure is and abstract notion derived from a multiplicity of individual conrete prices.The market does not generate prices of landor motorcars in generl nor wate rates in general, but prices for a certain piece of land and for a certain car and wage rates for a perfemance of a certain kind. 
The market DOES NOT create or determine incomes. It is not a process of income formation.... There is in natureno such thing as a stream of income. Income is a caegory of action; it is the outcome of carful economizing of scarce factors. This is still more obvious in the case of capital goods. The produced factors of production are not permanent. Although some of them may have a life of many years, all o them eventualy become esuless through wear and tear, sometimes vene by the mere passing of time. They become durable sources of income only if their owner treat thm as such . Capital can be preserved as a souces of incom if the consumption of its products, market conditions remaining unchanged, is restricted in such a way as not to impair the replacement of the worn out parts. 
The success of any provision for th uncertain future depens on the correctness of the anticipation which guided it. No income can be made safe against changes not adequately foreseen.
Neither is the pricing process a form of distribution. As has been pointed out already, there is nothing in the market economy to which the notion of distribution could b applied.
14. Prices and Production
The pricing process directs production into those channels in which it best serves the wishes of the consumers as manifested on the market. Only in the case of monoply prices have the monopolists the power to divert production, within a limited rang, from this line into other lines to their own benefit.
The prices determine which of the factors of production should be employed and which should be left unused.
It is nonsense to mament the fact of unused cpacity. The unused capacity of equipment made obsolete by technological improvement is a landmark of material progress. 
15. The Chimera of Nonmarket Prices
Prices are a market phenomenon. They are generated by the market process and are the pith of the market economy. There is no such thing as prices outside the market. Prices cannot be constructed synthetically, as it were. They are the resultant of  a certain constllation of market date, of actions and reactions of the members of a market society.
At the bottom of man efforts to determin nonmarket prices is the confused and contadictory notion of real costs. If costs were a real thing, i.e., a quantity idependent of personal value judgements and objectively and measurable, it would be possible for a disinterested arbiter to determin their height and thus the correct price.
Profit is the pay-off of successful action. t cannot be defined without refernce to valuation. It is a phenomenon of valuation and has no direct relation to physical and other phenomena of the external world.