After the collapse of the Soviet Socialist Republics (Soviet Union), the countries that gained their independence had entered the transition period from centralized economic system towards market economy. Azerbaijan is one of the countries involved in this process since the 1990s. The study’s aim is to assess the operation of Azerbaijan by establishing the structure of the price mechanism in transition process towards capitalist economic system. Prior to the study, the basic mechanism of market economy was emphasized and the mechanism of price was explained. In this framework, the features of price formation in terms of market types are considered and emphasis is placed on public pricing strategies as well as models. Public pricing is implemented in a manner that would serve different purposes. These can be expressed in terms of minimizing the welfare losses caused by market failures and/or contributing to public financing. Following the explanation of price mechanism, the study stresses the process of transition to Azerbaijan’s market economy and the basic macroeconomic situation of the country. At an institutional level, prices in Azerbaijan are determined by "Tarif Şurası" (Tariff Council). It is not unfair to say that the basic functioning of price mechanism in Azerbaijan has been defined as the provision of public financing. It can be considered that pricing policy is followed by public pricing due to weakness of GDP growth and lowness of tax capacity.