A characteristic feature that defines the market is its elemental order. The following brief definition can be given to this phenomenon. The market is a means of interaction between producers and consumers, based on a priceless mechanism of price indicators. All participants in economic relations enter into market relations. These are entrepreneurs, and those workers who sell their own labor, and organizations and people who issue loans, own securities, etc. Usually there are three groups of participants in a market economy: government, entrepreneurs (business) and households.
The government is represented by numerous budget organizations operating to regulate the economy; business - business enterprises working for the purpose of generating income; and the household is the owners.
The main conditions for the emergence of the market are the social division of labor and narrow specialization. The first category means that no one can fully provide himself with all the benefits of the economy and production resources. Each type of economic activity has its own group of manufacturers. This is a specialization in the manufacture and provision of various services and goods. Determines its ability to produce more services at an alternative, lower cost. This is called the principle of comparative advantage in economic theory and is a basic concept in it.
The market and the conditions for its occurrence also depend on the economic independence of its participants. Based on the social division of labor and specialization, goods and services are created and provided by completely separate producers. They decide on their own what products to engage in, how to develop them, they themselves find sales for their goods. Such economic independence can be fully realized under the current regime of private property.
After all, the emergence of a market for any product is impossible without the existence in society of such a set of norms that determines the rights of participants in economic relations. For example, if the owner of the land is not sure that he cannot be taken from him at any moment either, or his income, will he grow wheat in order to exchange it later? If it becomes under pressure, it will be a completely different form of economic relations, and the conditions for the emergence of the market will be destroyed. After all, it can exist only for those products on which it is possible to install, sell and transfer property rights.
The size of transaction costs is also important . Without such a condition for the emergence of a commodity market, it is impossible to imagine modern economic relations. For example, someone decided to bake home-made bread on their own in order to sell it at different points in their city. However, if he does not calculate in advance how much money will be spent on obtaining permission from the city authorities for sale, conclusions from the sanitary-epidemiological station, and deductions to racketeers, then the expense may ultimately exceed income, and the bread market will not be created. Thus, the boundaries and conditions of market activity are determined by transaction costs.
And finally, market relations are impossible without such a condition for the emergence of the market as the exchange of resources on a free basis. Specialization, exchange and the social division of labor can also be represented in the form of a hierarchical system, when an instruction will be received from the center to whom to produce products, which, with whom, and under what conditions to exchange it. But free prices can be formed only with the existence of free exchange. And prices will already indicate to the participants in the economic process in which direction their activities should go.