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Import parity
Also known as: IPP
Import parity is a price-setting mechanism for a commodity in which the price is set based on the cost of importing the commodity into a location.
Import parity is calculated as the cost of the commodity in the source location, plus the cost of delivery to the destination.
Import parity pricing is typical in a market that is consistently short of a commodity and importing marginal supply from another market.
Import parity pricing can occur either through market forces or be set directly through contracted terms.
