Market is meant a place where commodities are bought and sold at retail or wholesale prices. Thus, a market place is thought to be a place consisting of a number of big and small shops, stalls and even hawkers selling various types of goods.
(a) A market may be a region, which may be a district, state, country or even the whole world from which buyers and sellers are drawn and not any particular place where they assemble.
(b) The same price must rule for the same thing at the same time.
(c) There must be business intercourse among the dealers, i.e., buyers and sellers. They must be in touch with one another, so that they are aware of the prices offered or accepted by other buyers and sellers.
Features of Market:
- Buyers and Sellers:
To create a market for a commodity what we need is only a group of potential sellers and potential buyers. They must be present in the market of course at different places.
- One commodity:
In practical life, a market is understood as a place where commodities are bought and sold at retail or wholesale price, but in economics “Market” does not refer to a particular place as such but it refers to a market for a commodity or commodities i.e., a wheat market, a tea market or a gold market and so on.
In economics, market does not refer only to a fixed location. It refers to the whole area or region of operation of demand and supply
- Perfect Competition:
In the market there must be the existence of perfect competition between buyers and sellers. But the opinion of modern economist is that in the market the situation of imperfect competition also exists, therefore, the existence of both is found.
- Sound Monetary System:
Sound monetary system should be prevalent in the market, it means money exchange system, if possible, be prevalent in the market.
- Business relationship between Buyers and Sellers:
For a market, there must exist perfect business relationship between buyers and sellers. They may not be physically present in the market, but the business relationship must be carried on.
- One Price:
One and only one price be in existence in the market which is possible only through perfect competition and not otherwise.
- Perfect Knowledge of the Market:
Buyers and sellers must have perfect knowledge of the market regarding the demand of the customers, regarding their habits, tastes, fashions etc.
Types of Markets
- 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.
- 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.
- Auction Market: In an auction market the seller sells his goods to one who is the highest bidder.
- Market for Intermediate Goods: Such markets sell raw materials (goods) required for the final production of other goods.
- Black Market: A black market is a setup where illegal goods like drugs and weapons are sold.
- Knowledge Market: Knowledge market is a setup which deals in the exchange of information and knowledge-based products.
- Financial Market: Market dealing with the exchange of liquid assets (money) is called a financial market.