Market: essence and types

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, source of goods for sale (local produce or stock registration), and the threat of military or police force if these rules are broken.

 

Markets can differ by products (goods, services) or factors (labour and capital) sold, product differentiation, place in which exchanges are carried, buyers targeted, duration, selling process, government regulation, taxes, subsidies, minimum wages, price ceilings, legality of exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry, relative prices, volatility and geographic extension. The geographic boundaries of a market may vary considerably, for example the food market in a single building, the real estate market in a local city, the consumer market in an entire country, or the economy of an international trade bloc where the same rules apply throughout. Markets can also be worldwide, for example the global diamond trade. National economies can be classified, for example as developed markets or developing markets.

 

In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services, with or without money, is a transaction.[1] Market participants consist of all the buyers and sellers of a good who influence its price, which is a major topic of study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. A major topic of debate is how much a given market can be considered to be a "free market", that is free from government intervention. Microeconomics traditionally focuses on the study of market structure and the efficiency of market equilibrium; when the latter (if it exists) is not efficient, then economists say that a market failure has occurred. However it is not always clear how the allocation of resources can be improved since there is always the possibility of government failure.

 

Types

Physical consumer markets[edit]

food retail markets: farmers' markets, fish markets, wet markets and grocery stores

retail marketplaces: public markets, market squares, Main Streets, High Streets, bazaars, souqs, night markets, shopping strip malls and shopping malls

big-box stores: supermarkets, hypermarkets and discount stores

ad hoc auction markets: process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder

used goods markets such as flea markets

temporary markets such as fairs

Physical business markets[edit]

physical wholesale markets: sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users or to other wholesalers and related subordinated services

markets for intermediate goods used in production of other goods and services

labor markets: where people sell their labour to businesses in exchange for a wage

ad hoc auction markets: process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder

temporary markets such as trade fairs

Non-physical markets[edit]

media markets (broadcast market): is a region where the population can receive the same (or similar) television and radio station offerings, and may also include other types of media including newspapers and Internet content

Internet markets (electronic commerce): trading in products or services using computer networks, such as the Internet

artificial markets created by regulation to exchange rights for derivatives that have been designed to ameliorate externalities, such as pollution permits (see carbon trading)

Financial markets[edit]

Financial markets facilitate the exchange of liquid assets. Most investors prefer investing in two markets:

 

the stock markets, for the exchange of shares in corporations (NYSE, AMEX, and the NASDAQ are the most common stock markets in the US)

and the bond markets

There are also:

 

currency markets are used to trade one currency for another, and are often used for speculation on currency exchange rates

the money market is the name for the global market for lending and borrowing

futures markets, where contracts are exchanged regarding the future delivery of goods are often an outgrowth of general commodity markets

prediction markets are a type of speculative market in which the goods exchanged are futures on the occurrence of certain events. They apply the market dynamics to facilitate information aggregation.

Unauthorized and illegal markets[edit]

grey markets (parallel markets): is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer[citation needed]

markets in illegal goods such as the market for illicit drugs, illegal arms, infringing products, cigarettes sold to minors or untaxed cigarettes (in some jurisdictions), or the private sale of unpasteurized goat milk