Definition
Price discovery is the process through which a market determines the price of an asset via the interaction of buyers and sellers, incorporating available information, supply, and demand until a transaction actually clears at a mutually agreeable price.
In Panel Profits
Price discovery in Panel Profits is the process by which a comic issue's true current market price becomes known through actual clearing transactions, rather than through listings, asks, or model estimates. A thinly-traded key issue has poor price discovery -- its FMV benchmark rests on few, possibly stale, observations -- while a heavily-traded modern key has continuous, reliable price discovery.
Comic-market example
A Golden Age key with only two recorded sales in the past five years has weak price discovery; its FMV benchmark carries far more uncertainty than a modern key issue that clears dozens of times a year.
Common mistakes
Do not treat a single, thin-volume sale as having fully 'discovered' a fair price for an illiquid key issue -- weak price discovery should widen, not narrow, confidence in the resulting FMV.