Market
What is a Market?
A market is a conceptual or physical construct where participants can partake in
the buying and selling of goods and services. For a market to function
effectively there needs to be competition i.e. buyers competing to buy at
certain quantities and prices, and sellers competing to sell certain quantities
at various prices. Thus a market requires at least 3 participants to competition
on at least one side. Markets facilitate trade,
and enable the distribution and allocation of resources in societies that engage
in trade and commerce. Markets allow tradable items to be priced and evaluated
by informed market participants (e.g. the price of oil, the price of grain, the
price of shares in a company). Typically a market will operate with a medium of
exchange e.g. currency
or money, but a market can also exist under the concept of barter.
How does it relate to Markets?
The concept of a market was essential for the development of the financial
markets. The concept applies well to the stock
market; for instance, it provides the means for buying and selling shares -
in a competitive process, where numerous participants evaluate and make offers
to trade, using money as a medium for exchange, and through the collective
actions of participants; pricing the shares. The concept of a market also gives
rise to innovations such as tradable rights and obligations (e.g. derivatives),
and tradable interests in contingent outcomes (e.g. prediction
markets). The activity and price movement in markets can be particularly
informative (especially prediction markets), and thus a market can function as a
barometer of the overall economy, as well as other markets.
Sources and further reading:
Investopedia
- Market Economy
biz/ed
- The Nature of Markets - What is a Market?
The Economics of Health
Care - What is a market?
The
Free Dictionary - Market
Investopedia -
Free Market
Graph Library:
n/a
Original Source:
http://www.econgrapher.com/encyclopedia-market.html
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