Abstract
Price fluctuations make agriculture a risky business. High price fluctuation of agricultural commodities may have through its income effect a very unfavourable impact on the economic situation of agricultural subjects. In finding corresponding instruments of agricultural policy to stabilize prices and incomes, it is necessary to distinguish between various types of price changes. However, important question for conception of adequate price policy is how to protect against high price fluctuations and not to restrain function of price as a signal about market situation. Application of partial equilibrium analysis to evaluate impact of price stabilization policies is an adequate method, especially if price changes in the market do not cause significant price fluctuation in other markets. Using this methodological approach is possible to prove that price stabilization brings for common net benefit consumers and producers. However in practical application some additional aspects must be taken into account if dealing with stabilization of agricultural products prices.
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