Definition of 'Markets'

Definition: A market is defined as the sum total of all the buyers and sellers in the area or
region under consideration. The area may be the earth, or countries, regions, states, or
cities.

The value, cost and price of items traded are as per forces of supply and demand in a
market. The market may be a physical entity, or may be virtual. It may be local or global,
perfect and imperfect.

Description: What are the different types of markets?

A market can be called the 'available market' - that of all the people in the area. Within
the available market, there is the 'market minimum'- or the market size, which will buy
goods without any marketing effort. This is the lowest sale that a company could get
without any action on its part. In today's world, this level is sinking ever lower.

There is also the 'market potential', which is the maximum market size that will buy
goods when subjected to the greatest marketing action that a company can do. Beyond
this market potential, the costs outweigh the gains. The market potential is therefore the
upper limit for a marketplace and sales.
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 allocation of resources 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 of markets

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 enables the distribution and allocation of resources in a society.
Markets allow any trade-able item to be evaluated and priced. A market sometimes
emerges more or less spontaneously but is often constructed deliberately by human
interaction in order to enable the exploitative exchange of rights (cf. ownership) of
services and goods.

Markets of varying types can spontaneously arise whenever a party has interest in a good
or service that some other party can provide. Hence there can be a market for cigarettes in
correctional facilities, another for chewing gum in a playground, and yet another for
contracts for the future delivery of a commodity. There can be black markets, where a
good is exchanged illegally, for example markets for goods under a command economy
despite pressure to repress them, and virtual markets, such as eBay, in which buyers and
sellers do not physically interact during negotiation. A market can be organized as an
auction, as a private electronic market, as a commodity wholesale market, as a shopping
center, as a complex institution such as a stock market, and as an informal discussion
between two individuals.

Markets vary in form, scale (volume and geographic reach), location, and types of
participants, as well as the types of goods and services traded; nevertheless, violence and
extortion are common to many markets. The following is a non exhaustive list:

Physical consumer markets

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 centers 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

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

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

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

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[2]

What is a Market - Definition and Different types of Markets

A set up where two or more parties engage in exchange of goods, services and
information is called a market. Ideally a market is a place where two or more
parties are involved in buying and selling.

The two parties involved in a transaction are called seller and buyer.

The seller sells goods and services to the buyer in exchange of money. There has to
be more than one buyer and seller for the market to be competitive.

Monopoly - Monopoly is a condition where there is a single seller and many buyers
at the market place. In such a condition, the seller has a monopoly with no
competition from others and has complete control over the products and services.

In a monopoly market, the seller decides the price of the product or service and can
change it on his own.

Monopsony - A market form where there are many sellers but a single buyer is
called monopsony. In such a set up, since there is a single buyer against many
sellers; the buyer can exert his control on the sellers. The buyer in such a form has
an upper edge over the sellers.

Types of Markets

1. Physical Markets - Physical market is a set up where buyers can physically

meet the sellers and purchase the desired merchandise from them in
exchange of money. Shopping malls, department stores, retail stores are
examples of physical markets.
2. Non Physical Markets/Virtual markets - In such markets, buyers purchase
goods and services through internet. In such a market the buyers and sellers
 do not meet or interact physically, instead the transaction is done through
internet. Examples - Rediff shopping, eBay etc.
3. Auction Market - In an auction market the seller sells his goods to one who is
the highest bidder.
4. Market for Intermediate Goods - Such markets sell raw materials (goods)
required for the final production of other goods.
5. Black Market - A black market is a setup where illegal goods like drugs and
weapons are sold.
6. Knowledge Market - Knowledge market is a set up which deals in the
exchange of information and knowledge based products.
7. Financial Market - Market dealing with the exchange of liquid assets (money)
is called a financial market.

Financial markets are of following types:

1. Stock Market - A form of market where sellers and buyers exchange shares is
called a stock market.
2. Bond Market - A market place where buyers and sellers are engaged in the
exchange of debt securities, usually in the form of bonds is called a bond
market. A bond is a contract signed by both the parties where one party
promises to return money with interest at fixed intervals.
3. Foreign Exchange Market - In such type of market, parties are involved in
trading of currency. In a foreign exchange market (also called currency
market), one party exchanges one countrys currency with equivalent
quantity of another currency.
4. Predictive Markets - Predictive market is a set up where exchange of good or
service takes place for future. The buyer benefits when the market goes up
and is at a loss when the market crashes.

Market Size

The market size is directly proportional to two factors:

Number of sellers and Buyers

Total money involved annually
5 Different Types of Market Systems
by Leigh Richards

Related Articles

1 [Business Markets] | Five Types of Business Markets

2 [Different Types] | Different Types of Pricing Strategy
3 [Economic System Types] | Economic System Types
4 [Vertical Marketing Systems] | Three Types of Vertical Marketing Systems

In market economies, there are a variety of different market systems that exist, depending
on the industry and the companies within that industry. It is important for small business
owners to understand what type of market system they are operating in when making
pricing and production decisions, or when determining whether to enter or leave a
particular industry.

Perfect Competition

Perfect competition is a market system characterized by many different buyers and

sellers. In the classic theoretical definition of perfect competition, there are an infinite
number of buyers and sellers. With so many market players, it is impossible for any one
participant to alter the prevailing price in the market. If they attempt to do so, buyers and
sellers have infinite alternatives to pursue.

Monopoly

A monopoly is the exact opposite form of market system as perfect competition. In a pure
monopoly, there is only one producer of a particular good or service, and generally no
reasonable substitute. In such a market system, the monopolist is able to charge whatever
price they wish due to the absence of competition, but their overall revenue will be
limited by the ability or willingness of customers to pay their price.

Oligopoly

An oligopoly is similar in many ways to a monopoly. The primary difference is that

rather than having only one producer of a good or service, there are a handful of
producers, or at least a handful of producers that make up a dominant majority of the
production in the market system. While oligopolists do not have the same pricing power
as monopolists, it is possible, without diligent government regulation, that oligopolists
will collude with one another to set prices in the same way a monopolist would.
Monopolistic Competition

Monopolistic competition is a type of market system combining elements of a monopoly

and perfect competition. Like a perfectly competitive market system, there are numerous
competitors in the market. The difference is that each competitor is sufficiently
differentiated from the others that some can charge greater prices than a perfectly
competitive firm. An example of monopolistic competition is the market for music.
While there are many artists, each artist is different and is not perfectly substitutible with
another artist.

Monopsony

Market systems are not only differentiated according to the number of suppliers in the
market. They may also be differentiated according to the number of buyers. Whereas a
perfectly competitive market theoretically has an infinite number of buyers and sellers, a
monopsony has only one buyer for a particular good or service, giving that buyer
significant power in determining the price of the products produced.