Market tightness is a measure of the liquidity of a market. High market tightness indicates relatively low liquidity and high transaction costs, whereas low market tightness indicates high liquidity and low transaction costs.
For example, during the
dotcom bubble
The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet
The Internet (or internet) is the global system ...
,
information technology
Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology system (I ...
companies were very difficult and expensive to buy a part of, through stock, loan, or other methods, due to the tightness of competition in the market.
Equity markets
In equity markets, market tightness is measured using
percentage relative spread.
Housing markets
In housing markets, measures of market tightness include the probability of achieving a sale and house price appreciation. Tighter housing markets result in greater seller bargaining power and higher sale prices.
Labour markets
Labour market tightness is measured as the ratio of job vacancies per
unemployed
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the referen ...
person or jobseeker.
References
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Market structure