UNIT 9 Market

A market is one of 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 in which the prices of goods and services are established.

For a market to be competitive, there must be more than a single buyer or seller. It has been suggested that two people may trade, but it takes at least three persons to have a market, so that there is competition on at least one of its two sides. However, competitive markets rely on much larger numbers of both buyers and sellers. A market with single seller and multiple buyers is a monopoly. A market with a single buyer and multiple sellers is a monopsony.

Markets vary in form, scale (volume and geographic reach), location, and types of participants, as well as the types of goods and services traded. Examples of market are presented in table 9.1

Table 9.1

Examples of varying market

	Physical retail markets	such as local farmers' markets (which are usually held in town squares or parking lots on an ongoing or occasional basis), shopping centers and shopping malls
	Artificial markets	created by regulation to exchange rights for derivatives that have been designed to ameliorate externalities, such as pollution permits
	Foreign exchange market	a form of exchange for the global decentralized trading of international currencies
	Stock markets,	for the exchange of shares in corporations
	Commodity markets	markets where raw or primary products are exchanged
	Labor markets	function through the interaction of workers and employers
	Markets for intermediate goods	Which means for goods used in production of other goods and services
	(Non-physical) internet markets	refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks.
	Illegal markets	such as the market for illicit drugs, arms or pirated products

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 for money is a transaction. Market participants consist of all the buyers and sellers of a good who influence its price. This influence is a major study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. There are two roles in markets, buyers and sellers.

Although many markets exist in the traditional sense – such as a marketplace – there are various other types of markets and various organizational structures to assist their functions. The nature of business transactions could define markets.

Financial markets

Financial markets facilitate the exchange of liquid assets. Most investors prefer investing in two markets, the stock markets and the bond markets. NYSE, AMEX, and the NASDAQ are the most common stock markets in the US. Futures markets, where contracts are exchanged regarding the future delivery of goods are often an outgrowth of general commodity markets.

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.

Prediction 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.

General definition of the market is presented on the image 9.1