The market is a complex system of economic relations and relations between entities that participate in the processes of production, consumption, distribution or exchange of various goods and services at appropriate market prices, formed on the basis of the balance of supply and demand, taking into account competition.
Essence of the market
The market is the interaction of buyers and sellers. Between them, agreements and contracts arise under which various transactions are carried out with the agreed terms of interaction. Market participants are all business entities - from private households to the state. Moreover, a significant role in such interaction is assigned to intermediaries who can simultaneously act as sellers and buyers.
The essence of the market is a mechanism for the interaction of consumers who make a demand for a product and sellers who form a supply of a given product. The products themselves are thus objects of the market. The concept of goods is not limited to material things. This may be services, resources, currency, securities, government benefits, etc.
To build adequate relationships, market participants need information about the supply and demand for this product. The essence of the market is also in the transfer of this information - usually in the form of prices. The number of incoming goods and services, the income of buyers, the increase in their needs form demand and supply, which ensures the continuous functioning of the market.
In general, the essence and functions of the market are as follows:
- Coordination of the needs of buyers and opportunities of sellers, which occurs by identifying the relationship between supply and demand in this market segment.
- Providing customers with the opportunity to choose the right goods and services, and sellers with the most attractive sales markets. This is made possible thanks to the free movement of goods, labor, capital both within the country and between states.
- Stimulating a reduction in production costs so that sellers can bid on their products in the range between market price and cost.
- Improving the state of the country's economy through the use of bankruptcy and self-liquidation of firms that offer low-quality, too expensive or out-of-date goods and services.
Thus, the processes of pricing, mediation, regulation, information content and rehabilitation determine the essence of the market. All these functions are performed by direct business entities in the course of sales transactions. With the help of the market, economically isolated buyers and sellers can form the necessary connections, thereby creating diverse market structures.
There are many classifications of such structures. First of all, markets can be divided into two large segments: goods and services. Then they are crushed into smaller parts. Depending on the sector of production of goods and services, these may be markets for industrial goods, food, resource markets, etc.
There is also a division by type of productive resources used: land markets, information, capital, labor, etc.
Separate segments are also crushed into smaller structures. For example, in the field of information, one can single out separate markets for scientific and technological developments, innovations, and technologies. And in the financial environment, there are separate markets for securities (stock), currencies, etc. All of them fulfill their tasks and satisfy the narrow specific needs of customers. For example, the essence of the foreign exchange market is to regulate the processes of exchange, purchase and sale of currencies at various levels of interaction between business entities.
On a territorial basis, markets can be local, intraregional, national, international.
Depending on the presence of competition, there are monopolistic, oligopolistic or freely competitive markets.
As we can see, there are many classifications and ways of dividing into segments. The diversity of markets is growing in proportion to the growth of human needs and opportunities.