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A market is a composition of
system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of interaction, as opposed to a one-way causal e ...

system
s,
institution Institutions, according to Samuel P. Huntington Samuel Phillips Huntington (April 18, 1927 – December 24, 2008) was an American political scientist, adviser and academic. He spent more than half a century at Harvard University Har ...
s, procedures,
social relation In social science, a social relation or social interaction is any relationship between two or more individuals. Social relations derived from agency (sociology), individual agency form the basis of social structure and the basic object for analys ...
s or
infrastructure Infrastructure is the set of fundamental facilities and systems that support the sustainable functionality of households and firms. Serving a country, city, or other area, including the services and facilities necessary for its economy An eco ...

infrastructure
s whereby parties engage in
exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green Township, Morgan County, Indiana, Morgan County, in the U.S. state of In ...
. While parties may exchange goods and services by
barter In trade, barter (derived from ''baretor'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods or ...

barter
, most markets rely on sellers offering their goods or services (including
labour power Labour power (in german: Arbeitskraft; in french: force de travail) is a key concept used by Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher A philosopher is someone who practices philosophy. The t ...
) to buyers in exchange for
money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or verifiable record that is generally a ...

money
. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate
trade Trade involves the transfer of goods from one person or entity to another, often in exchange for money. Economists refer to a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of r ...

trade
and enable the distribution and
allocation of resources In economics, resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as Market (economics), markets, or Economic planning, planning. In pr ...
in a society. Markets allow any trade-able item to be evaluated and
price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by ...

price
d. A market
emerges
emerges
more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf.
ownership Ownership is the state or fact of exclusive right In Anglo-Saxon law Anglo-Saxon law (Old English Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language English is a West Germanic languages, West Germ ...
) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale (local produce or stock registration). Markets can differ by products (goods, services) or factors (labour and capital) sold,
product differentiation In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
, place in which exchanges are carried, buyers targeted, duration, selling process, government regulation, taxes, subsidies,
minimum wage A minimum wage is the lowest remuneration Remuneration is the pay or other financial compensationFinancial compensation refers to the act of providing a person with money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, ...
s,
price ceiling A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a product, commodity, or service. Governments use price ceilings ostensibly to protect consumers from conditions that could make commodi ...

price ceiling
s, legality of exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry,
relative price A relative price is the price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "m ...
s, volatility and geographic extension. The geographic boundaries of a market may vary considerably, for example the food market in a single building, the real estate market in a local city, the consumer market in an entire country, or the economy of an international
trade bloc A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization An intergovernmental organization (IGO) is an organization composed primarily of sovereign states (referred to as ''member states'') ...
where the same rules apply throughout. Markets can also be worldwide, see for example the global
diamond trade Diamond is a solid form of the element carbon with its atoms arranged in a crystal structure In crystallography Crystallography is the experimental science of determining the arrangement of atoms in crystalline solids (see crystal structur ...
. National economies can also be classified as
developed market In investing, a developed market is a country that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness to foreign ownership, ease of capital movement, and efficiency of mar ...
s or
developing market 450px, Example of Older Classifications by the IMF and the United Nations, UN from 2008 A developing country is a country with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, ...
s. In
mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to he ...
, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and
information Information is processed, organised and structured data Data (; ) are individual facts A fact is something that is truth, true. The usual test for a statement of fact is verifiability—that is whether it can be demonstrated to c ...
. The exchange of goods or services, with or without
money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or verifiable record that is generally a ...

money
, is a transaction.
Market participant The term market participant is another term for economic agent In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), di ...
s consist of all the buyers and sellers of a
good 125px, In many Western religions, angels are considered to be good beings and are contrasted with devils who are considered evil In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice betwee ...

good
who influence its
price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by ...

price
, which is a major topic of study of
economic An economy (; ) is an area of the production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products ( ...

economic
s and has given rise to several theories and models concerning the basic market forces of
supply and demand In microeconomics Microeconomics is a branch of that studies the behavior of individuals and in making decisions regarding the allocation of and the interactions among these individuals and firms. Microeconomics focuses on the study ...

supply and demand
. A major topic of debate is how much a given market can be considered to be a "
free market In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of pl ...
", that is free from
government intervention Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process to correct market failure In neoclassical economics, market failure is a situation ...
. Microeconomics traditionally focuses on the study of market structure and the efficiency of
market equilibrium In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies ...
; when the latter (if it exists) is not efficient, then economists say that a
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where indivi ...
has occurred. However, it is not always clear how the allocation of resources can be improved since there is always the possibility of
government failure Government failure, in the context of public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiencyIn microeconomics, economic efficiency is, roughly speaking, a sit ...
.


Definition

In economics, a market is a coordinating mechanism that uses prices to convey information among economic entities (such as
firms Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trade ...

firms
, households and individuals) to regulate production and distribution. In his seminal 1937 article "
The Nature of the Firm "The Nature of the Firm" (1937) is an article by Ronald Coase. It offered an economic explanation of why individuals choose to form partnerships, companies and other business entities rather than trading bilaterally through contracts on a market. Th ...
",
Ronald Coase Ronald Harry Coase (; 29 December 1910 – 2 September 2013) was a British economist and author. He was the Clifton R. Musser Professor of Economics at the University of Chicago Law School, where he arrived in 1964 and remained for the rest of hi ...
wrote: "An economist thinks of the economic system as being coordinated by the price mechanism....in economic theory we find that the allocation of factors of production between different uses is determined by the price mechanism". Thus the usage of the price mechanism to convey information is the defining feature of the market. This is in contrast to a firm, which as Coase put it, "the distinguishing mark of the firm is the super-session of the price mechanism". Thus, Firms and Markets are two opposite forms of organizing production; Coase wrote: There are also other hybrid forms of coordinating mechanisms, in between the hierarchical firm and price-coordinating market(e.g. global value chains,
Business Venture Venture capital (VC) is a form of private equity financing that is provided by venture capital firms or funds to start-up company, startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have dem ...
s,
Joint Venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership Equity sharing is another name for shared ownership or ''co-ownership (disambiguation), co-ownership''. It takes one property, ...
, and
strategic alliance A strategic alliance (also see strategic partnership) is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. The alliance is a cooperation or collaboration which aims ...
s). The reasons for the existence of firms or other forms of co-ordinating mechanisms of production and distribution alongside the market are studied in "The Theory of the Firm" literature, with various complete and incomplete contract theories trying to explain the existence of the firm. Incomplete contract theories that are explicitly based on
bounded rationality Bounded rationality is the idea that rationality Rationality is the quality or state of being rational – that is, being based on or agreeable to reason Reason is the capacity of consciously applying logic by Logical consequence, drawing con ...
lead to the costs of writing complete contracts. Such theories include: Transaction Cost Economies by
Oliver Williamson Oliver Eaton Williamson (September 27, 1932 – May 21, 2020) was an American economist An economist is a practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories ...

Oliver Williamson
and Residual Rights Theory by Groomsman, Hart, and Moore. Market-Firms's dichotomy can be contrasted with the relationship between the agents transacting. While in a market the relationship is short term and restricted to the contract, in the case of firms and other co-ordinating mechanisms it is for a longer duration. In the modern world much economic activity takes place through fiat and not the market. Lafontaine and Slade (2007) estimates, in the US, that the total value added in transactions inside the firms equal the total value added of all market transactions. Similarly, 80% of all World Trade is conducted under Global Value Chains (2012 estimate), while 33% (1996 estimate) is intra-firm trade. Nearly 50% of US imports and 30% of exports take place within firms. While Rajan and Zingales (1998) have found that in 43 countries two-thirds of the growth in value added between 1980 and 1990 came from increase in firm size.


Types

A market is one of the many varieties of
system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of interaction, as opposed to a one-way causal e ...

system
s,
institution Institutions, according to Samuel P. Huntington Samuel Phillips Huntington (April 18, 1927 – December 24, 2008) was an American political scientist, adviser and academic. He spent more than half a century at Harvard University Har ...
s, procedures,
social relation In social science, a social relation or social interaction is any relationship between two or more individuals. Social relations derived from agency (sociology), individual agency form the basis of social structure and the basic object for analys ...
s and
infrastructure Infrastructure is the set of fundamental facilities and systems that support the sustainable functionality of households and firms. Serving a country, city, or other area, including the services and facilities necessary for its economy An eco ...

infrastructure
s whereby parties engage in exchange. While parties may exchange goods and services by
barter In trade, barter (derived from ''baretor'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods or ...

barter
, most markets rely on sellers offering their goods or services (including labour) in exchange for
money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or verifiable record that is generally a ...

money
from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate
trade Trade involves the transfer of goods from one person or entity to another, often in exchange for money. Economists refer to a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of r ...

trade
and enable the distribution and
allocation of resources In economics, resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as Market (economics), markets, or Economic planning, planning. In pr ...
in a society. Markets allow any trade-able item to be evaluated and
price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by ...

price
d. A market sometimes more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf.
ownership Ownership is the state or fact of exclusive right In Anglo-Saxon law Anglo-Saxon law (Old English Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language English is a West Germanic languages, West Germ ...
) of services and goods. Markets of varying types can spontaneously arise whenever a party has interest in a good or service that some other party can provide. Hence there can be a market for cigarettes in correctional facilities, another for chewing gum in a playground, and yet another for contracts for the future delivery of a commodity. There can be
black market Barcelona 2015 A black market, underground economy or shadow economy, is a clandestine ''The ClanDestine'' (also known simply as ''ClanDestine'') is an appellation used to refer to the Destines, a fictional secret family of long-lived su ...
s, where a good is exchanged illegally, for example markets for goods under a command economy despite pressure to repress them and , such as
eBay eBay Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational sta ...
, in which buyers and sellers do not physically interact during negotiation. A market can be organized as an
auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), d ...

auction
, as a private electronic market, as a commodity , as a
shopping center A shopping center (American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. Currently, America ...
, as complex institutions such as international markets and as an informal discussion between two individuals. Markets vary in form, scale (volume and geographic reach), location and types of participants as well as the types of goods and services traded. The following is a non exhaustive list:


Physical consumer markets

* Food retail markets: farmers' markets,
fish market A fish market is a marketplace fa:بازار A market, or marketplace, is a location where people regularly gather for the purchase and sale of provisions, livestock, and other goods. In different parts of the world, a market place may b ...

fish market
s,
wet market A wet market (also called a public market or a traditional market) is a marketplace A market, or marketplace, is a location where people regularly go to gather for the purchase and sale of provisions, livestock, and other goods. In di ...
s and
grocery store A grocery store (North America), grocery or grocery shop (UK) is a store that primarily retails a general range of food products, which may be Fresh food, fresh or Food preservation, packaged. In everyday U.S. usage, however, "grocery store" i ...

grocery store
s * Retail marketplaces:
public markets A market, or marketplace, is a location where people regularly go to gather for the purchase and sale of provisions, livestock, and other goods. In different parts of the world, a market place may be described as a ''souk'' (from the Arab ...
,
market square The market square (or sometimes, the market place) is a square In Euclidean geometry, a square is a regular The term regular can mean normal or in accordance with rules. It may refer to: People * Moses Regular (born 1971), America football p ...

market square
s,
Main Street Main Street is a metonym Metonymy () is a figure of speech in which a thing or concept is referred to by the name of something closely associated with that thing or concept. Etymology The words ''metonymy'' and ''metonym'' come from the Greek ...

Main Street
s,
High Street #REDIRECT High Street High Street is a common street name for the primary business Business is the activity of making one's living or making money by producing or buying and selling Product (business), products (such as goods and services) ...

High Street
s,
bazaar A bazaar or souk, is a permanently enclosed marketplace or street where goods and services are exchanged or sold. The term bazaar originates from the Persian language, Persian word ''bāzār''. The term bazaar is sometimes also used to refer ...

bazaar
s, s,
night market Night markets or night bazaars are street market fa:بازار A market, or marketplace, is a location where people regularly gather for the purchase and sale of provisions, livestock, and other goods. In different parts of the world, a mark ...
s, shopping
strip mall A strip mall or strip center or strip plaza is a type of shopping center A shopping center (American English) or shopping centre (Commonwealth English), also called a shopping complex, shopping arcade, shopping plaza or galleria, is a group of ...
s and
shopping mall A shopping mall (or simply mall) is a North American term for a large indoor shopping center A shopping center (American English) or shopping centre (Commonwealth English), also called a shopping complex, shopping arcade, shopping plaza or ga ...

shopping mall
s *
Big-box store A big-box store (also hyperstore, supercenter, superstore, or megastore) is a physically large retail establishment, usually part of a chain Image:Kettenvergleich.jpg, Roller chains A chain is a wikt:series#Noun, serial assembly of connecte ...
s:
supermarket A supermarket is a self-service Retail#Types of outlets, shop offering a wide variety of food, Drink, beverages and Household goods, household products, organized into sections. This kind of store is larger and has a wider selection than earli ...

supermarket
s,
hypermarket Asian hypermarket in the Philippines, a branch of SM Hypermarket in SM Mall of Asia">SM_Hypermarket.html" ;"title="Philippines, a branch of SM Hypermarket">Philippines, a branch of SM Hypermarket in SM Mall of Asia in Pasay, Metro Manila A hy ...
s and
discount store A discount store or discounter offers a retail format in which products are sold at prices that are in principle lower than an actual or supposed "full retail price". Discounters rely on bulk purchasing Bulk purchasing (or "mass buying") is the p ...
s * ''Ad hoc''
auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), d ...

auction
markets: process of buying and selling goods or services by offering them up for bid, taking bids and then selling the item to the highest bidder * Used goods markets such as
flea market A flea market (or swap meet) is a type of street market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entert ...

flea market
s * Temporary markets such as
fair A fair (archaic: faire or fayre) is a gathering of people for a variety of entertainment or commercial activities. It is normally of the essence of a fair that it is temporary with scheduled times lasting from an afternoon to several weeks. ...

fair
s *
Real estate market Real estate business is the profession of buying, selling, or renting real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of th ...
s


Physical business markets

* Physical s: sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users or to other wholesalers and related subordinated services * Markets for
intermediate good Intermediate goods, producer goods or semi-finished products are goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (econo ...
s used in production of other goods and services *
Labour market Labour economics seeks to understand the functioning and dynamics of the markets Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finlan ...
s: where people sell their labour to businesses in exchange for a
wage A wage is the distribution from an employer of a ''security'' (expected return or profits derived solely from others) paid to an employee. Like interest is paid out to an investor on his investments, a wage is paid (from company earnings) to t ...

wage
*
Online auctions An online auction (or also electronic auction or e-auction or eAuction) is an auction which is held over the internet. Like auctions in general, online auctions come in a variety of Auction#Types, types like ascending English auctions, descending D ...
and ''Ad hoc''
auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), d ...

auction
markets: process of buying and selling goods or services by offering them up for bid, taking bids and then selling the item to the highest bidder * Temporary markets such as
trade fair A trade fair (trade show, trade exhibition, or trade exposition) is an exhibition organized so that companies A company, abbreviated as co., is a legal entity In law, a legal person is any person A person (plural people or persons) i ...

trade fair
s *
Energy market Energy markets are commodity market A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and Crude oil, oil. F ...
s


Non-physical markets

*
Media market A media market, broadcast market, media region, designated market area (DMA), television market area, or simply market is a region where the population Population typically refers the number of people in a single area whether it be a cit ...
s (broadcast market): is a region where the population can receive the same (or similar) television and radio station offerings and may also include other types of media including newspapers and Internet content * Internet markets (
electronic commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronic ...
): trading in products or services using computer networks, such as the Internet * Artificial markets created by regulation to exchange rights for derivatives that have been designed to ameliorate
externalities In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, such as pollution permits (see
carbon trading Carbon emissions trading is a form of emissions trading Emissions trading (also known as cap and trade, emissions trading scheme or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the e ...
)


Financial markets

Financial market A financial market is a market (economics), market in which people trade financial Security (finance), securities and derivative (finance), derivatives at low transaction costs. Some of the securities include stocks and Bond (finance), bonds, ra ...
s facilitate the exchange of
liquid asset In business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a busines ...
s. Most investors prefer investing in two markets: * The
stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as w ...

stock market
s, for the exchange of shares in
corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal ...

corporation
s (
NYSE The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is by far the List of stock exchanges, world's largest s ...

NYSE
, AMEX and the
NASDAQ The Nasdaq Stock Market () is an American stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorpora ...
are the most common stock markets in the United States) * The
bond market The bond market (also debt market or credit market) is a financial market A financial market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an i ...
s There are also: *
Currency market The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) market for the trading of currency, currencies. This market determines Exchange rate ...
s are used to trade one currency for another, and are often used for speculation on currency exchange rates * The
money market The money market is a component of the economy which provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity In economics Economic ...
is the name for the global market for lending and borrowing *
Futures market A futures exchange or futures market is a central financial exchange where people can trade standardized futures contract In finance Finance is the study of financial institutions, financial markets and how they operate within the financial ...
s, where contracts are exchanged regarding the future delivery of goods are often an outgrowth of general
commodity market A commodity market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films ...
s *
Prediction market Prediction markets (also known as betting markets, information markets, decision markets, idea futures or event derivatives) are exchange-traded markets created for the purpose of trading the outcome of events. The market price A price is ...
s are a type of speculative market in which the goods exchanged are futures on the occurrence of certain events; they apply the market dynamics to facilitate information aggregation *
Insurance Insurance is a means of protection from financial loss. It is a form of risk management Risk management is the identification, evaluation, and prioritization of risk In simple terms, risk is the possibility of something bad happening. ...

Insurance
markets * Debt markets


Unauthorized and illegal markets

*
Grey market A grey market or dark market (sometimes confused with the similar term " parallel market") is the trade of a commodity through distribution channels that are not authorized by the original manufacturer or trade mark A trademark (also ...
s (parallel markets): is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer * markets in illegal goods such as the market for
illicit drugs Illicit may refer to: * Illicit antiquities * Illicit cigarette trade * Illicit drug trade ** Illicit drug use ** Illicit Drug Anti-Proliferation Act * Illicit financial flows * Illicit major * Illicit minor Illicit minor is a formal fallac ...
, illegal arms, infringing products, cigarettes sold to minors or untaxed cigarettes (in some jurisdictions), or the private sale of unpasteurized goat milk


Mechanisms

In economics, a market that runs under laissez-faire policies is called a
free market In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of pl ...
, it is "free" from the government, in the sense that the government makes no attempt to intervene through taxes, subsidy, subsidies,
minimum wage A minimum wage is the lowest remuneration Remuneration is the pay or other financial compensationFinancial compensation refers to the act of providing a person with money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, ...
s,
price ceiling A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a product, commodity, or service. Governments use price ceilings ostensibly to protect consumers from conditions that could make commodi ...

price ceiling
s and so on. However, market prices may be distorted by a seller or sellers with monopoly power, or a buyer with monopsony power. Such price distortions can have an adverse effect on market participant's welfare and reduce the Pareto efficiency, efficiency of market outcomes. The relative level of organization and bargaining power, negotiating power of buyers and sellers also markedly affects the functioning of the market. Markets are a
system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of interaction, as opposed to a one-way causal e ...

system
and systems have structure. The Market structure, structure of a well-functioning market is defined by the theory of perfect competition. Well-functioning markets of the real world are never perfect, but basic structural characteristics can be approximated for real world markets, for example: * Many small buyers and sellers * Buyers and sellers have equal access to information * Products are comparable Markets where price negotiations meet equilibrium, but the equilibrium is not Pareto efficiency, efficient are said to experience
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where indivi ...
. Market failures are often associated with time-inconsistent preferences, Information asymmetry, information asymmetries, Market structure, non-perfectly competitive markets, principal–agent problems,
externalities In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, or public goods. Among the major negative externalities which can occur as a side effect of production and market exchange, are air pollution (side-effect of manufacturing and logistics) and environmental degradation (side-effect of farming and urbanization). There exists a popular thought, especially among economists, that free markets would have a structure of a perfect competition. The logic behind this thought is that market failure is thought to be caused by other Exogeny, exogenic systems, and after removing those exogenic systems ("freeing" the markets) the free markets could run without market failures. For a market to be competitive, there must be more than a single buyer or seller. It has been suggested that two people may trade, but it takes at least three persons to have a market so that there is competition in at least one of its two sides. However, competitive markets—as understood in formal economic theory—rely on much larger numbers of both buyers and sellers. A market with a single seller and multiple buyers is a monopoly. A market with a single buyer and multiple sellers is a monopsony. These are "the polar opposites of perfect competition". As an argument against such logic, there is a second view that suggests that the source of market failures is inside the market system itself, therefore the removal of other interfering systems would not result in markets with a structure of perfect competition. As an analogy, such an argument may suggest that capitalists do not want to enhance the structure of markets, just like a coach (sport), coach of a football team would influence the referees or would break the Regulation of sport, rules if he could while he is pursuing his target of winning the game. Thus, according to this view, capitalists are not enhancing the balance of their team versus the team of consumer-Workforce, workers, so the market system needs a "referee" from outside that balances the game. In this second framework, the role of a "referee" of the market system is usually to be given to a democracy, democratic government.


Research

Disciplines such as sociology, economic history, economic geography and marketing developed novel understandings of markets studying actual existing markets made up of persons interacting in diverse ways in contrast to an abstract and all-encompassing concepts of "the market". The term "the market" is generally used in two ways: # "The market" denotes the abstract mechanisms whereby supply and demand confront each other and deals are made; in its place, reference to markets reflects ordinary experience and the places, processes and institutions in which exchanges occurs # "The market" signifies an integrated, all-encompassing and cohesive capitalist world economy.


Economics


Political economy

Economics used to be called political economy, as Adam Smith defined it in The Wealth of Nations: The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). Smith describes how exchange of goods arose: And explains how exchanged mediated by money came to dominate the market:


Microeconomics

Microeconomics (from Greek prefix ''mikro''- meaning "small" and economics) is a branch of economics that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources (see scarcity). On the other hand, macroeconomics (from the Greek prefix ''makro''- meaning "large" and economics) is a branch of economics dealing with the performance, structure, behavior and decision-making of an economy as a whole, rather than individual markets.


=Marginal revolution

= The modern field of microeconomics arose as an effort of neoclassical economics school of thought to put economic ideas into mathematical mode. It began in the 19th century debates surrounding the works of Antoine Augustin Cournot, William Stanley Jevons, Carl Menger and Léon Walras—this period is usually denominated as the Marginalism, Marginal Revolution. A recurring theme of these debates was the contrast between the labor theory of value and the subjective theory of value, the former being associated with classical economists such as Adam Smith, David Ricardo and Karl Marx (Marx was a contemporary of the marginalists). A labour theory of value can be understood as a theory that argues that economic value is determined by the amount of socially necessary labour time while a subjective theory of value derives economic value from subjective preferences, usually by specifying a utility function in accordance with Utilitarianism, utilitarian philosophy. In his ''Principles of Economics (Marshall book), Principles of Economics'' (1890), Alfred Marshall presented a possible solution to this problem, using the
supply and demand In microeconomics Microeconomics is a branch of that studies the behavior of individuals and in making decisions regarding the allocation of and the interactions among these individuals and firms. Microeconomics focuses on the study ...

supply and demand
model. Marshall's idea of solving the controversy was that the demand curve could be derived by aggregating individual consumer demand curves, which were themselves based on the consumer problem of maximizing utility. The supply curve could be derived by superimposing a representative firm supply curves for the factors of production and then
market equilibrium In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies ...
(economic equivalent of mechanical equilibrium) would be given by the intersection of demand and supply curves. He also introduced the notion of different market periods: mainly long run and short run. This set of ideas gave way to what economists call perfect competition—now found in the standard microeconomics texts, even though Marshall himself was highly skeptical it could be used as general model of all markets.


=Market structure

= Opposed to the model of perfect competition, some models of imperfect competition were proposed: * The monopoly model, already considered by marginalist economists, describes a profit maximizing capitalist facing a market demand curve with no competitors, who may practice price discrimination. * Oligopoly is a market form in which a market or industry is dominated by a small number of sellers. The oldest model was the sprin water duopoly of Antoine Augustin Cournot, Cournot(1838) in which equilibrium is determined by the duopolists Best response, reactions functions. It was criticized by Harold Hotelling for its instability, by Joseph Bertrand for lacking equilibrium for prices as independent variables. * Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g., by branding or quality) and hence are not perfect substitutes. In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms. The "founding father" of the theory of monopolistic competition is Edward Hastings Chamberlin, who wrote a pioneering book on the subject, ''Theory of Monopolistic Competition'' (1933). Joan Robinson published a book called ''The Economics of Imperfect Competition'' with a comparable theme of distinguishing perfect from imperfect competition. Chamberlin defined monopolistic competition as "challenge to traditional viewpoint of economics that competition and monopoly are alternatives and that individual prices are to be explained in terms of one or the other". He continues: "By contrast it is held that most economic situations are composite of both competition and monopoly, and that, wherever this is the case, a false view is given by neglecting either one of the two forces and regarding the situation as made up entirely of the other". Hotelling built a model of market located over a line with two sellers in each extreme of the line, in this case maximizing profit for both sellers leads to a stable equilibrium. From this model also follows that if a seller is to choose the location of his store so as to maximize his profit, he will place his store the closest to his competitor as "the sharper competition with his rival is offset by the greater number of buyers he has an advantage". He also argues that clustering of stores is wasteful from the point of view of transportation costs and that public interest would dictate more spatial dispersion. * William Baumol provided in his 1977 paper the current formal definition of a natural monopoly where “an industry in which multiform production is more costly than production by a monopoly”. * Baumol defined a contestable market in his 1982 paper as a market where "entry is absolutely free and exit absolutely costless", freedom of entry in George Stigler, Stigler sense: the incumbent has no cost discrimination against entrants. He states that a contestable market will never have an economic profit greater than zero when in equilibrium and the equilibrium will also be Efficiency, efficient. According to Baumol, this equilibrium emerges endogenous variable, endogenously due to the nature of contestable markets; that is, the only industry structure that survives in the long run is the one which minimizes total costs. This is in contrast to the older theory of industry structure since not only is industry structure not exogenous variable, exogenously given, but equilibrium is reached without an ad hoc hypothesis on the behavior of firms, say using reaction functions in a duopoly. He concludes the paper commenting that regulators that seek to impede entry and/or exit of firms would do better to not interfere if the market in question resembles a contestable market.


=Market failure

= Around the 1970s the study of
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where indivi ...
s came into focus with the study of information asymmetry. In particular, three authors emerged from this period: Akerlof, Spence and Stiglitz. Akerlof considered the problem of bad quality cars driving good quality cars out of the market in his classic "The Market for Lemons" (1970) because of the presence of asymmetrical information between buyers and sellers. Michael Spence explained that signaling was fundamental in the labour market since employers can't know beforehand which candidate is the most productive, a college degree becomes a signaling device that a firm uses to select new personnel. Stiglitz provided some general conditions under which market equilibrium is not Pareto efficiency, efficient: presence of
externalities In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, imperfect information and incomplete markets.


=State interference

= C. B. Macpherson identifies an underlying model of the market underlying Anglo-American liberal democratic political economy and philosophy in the seventeenth and eighteenth centuries: persons are cast as self-interested individuals, who enter into contractual relations with other such individuals, concerning the exchange of goods or personal capacities cast as commodities, with the motive of maximizing pecuniary interest. The state and its governance systems are cast as outside of this framework. This model came to dominant economic thinking in the later nineteenth century, as so called liberal economists such as David Ricardo, Ricardo, James Mill, Mill, William Stanley Jevons, Jevons, Léon Walras, Walras and later neo-classical economics shifted from reference to geographically located marketplaces to an abstract "market". This tradition is continued in contemporary neoliberalism epitomised by the Mont Pelerin Society which gathered Frederick Hayek, Ludwig von Mises, Milton Friedman and Karl Popper, where the market is held up as optimal for wealth creation and human freedom and the states' role imagined as minimal, reduced to that of upholding and keeping stable property rights, contract and money supply. According to David Harvey, this allowed for boilerplate economic and institutional restructuring under structural adjustment and post-Communist reconstruction. Similar formalism occurs in a wide variety of social democratic and Marxist discourses that situate political action as antagonistic to the market. György Lukács, a founder of Western Marxism insists that market relations necessarily lead to undue exploitation of labour and so need to be opposed ''in toto''. A central theme of empirical analyses is the variation and proliferation of types of markets since the rise of capitalism and global scale economies. The Regulation school stresses the ways in which developed capitalist countries have implemented varying degrees and types of environmental, economic and social regulation, taxation and public spending, fiscal policy and government provisioning of goods, all of which have transformed markets in uneven and geographical varied ways and created a variety of mixed economies.


Economic coordination

Drawing on concepts of institutional variance and path dependence, varieties of capitalism theorists (such as Peter Hall and David Soskice) identify two dominant modes of economic ordering in the developed capitalist countries: *Coordinated market economies (such as Germany and Japan) based on relational or incomplete contracting, network monitoring based on the exchange of private information inside networks, and more reliance on collaborative, as opposed to competitive, relationships to build the competencies of the firm *Anglo-American liberal market economies: firms coordinate their activities primarily via hierarchies and competitive market arrangements. However, such approaches imply that the Anglo-American liberal market economies in fact operate in a matter close to the abstract notion of "the market". While Anglo-American countries have seen increasing introduction of neo-liberal forms of economic ordering, this has not led to simple convergence, but rather a variety of hybrid institutional orderings. Rather, a variety of new markets have emerged, such as for
carbon trading Carbon emissions trading is a form of emissions trading Emissions trading (also known as cap and trade, emissions trading scheme or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the e ...
or rights to pollute. In some cases, such as emerging markets for water in England and Wales, different forms of neoliberalism have been tried: moving from the state hydraulic model associated with concepts of universal provision and public service to market environmentalism associated with pricing of environmental externalities to reduce environmental degradation and efficient allocation of water resources. In this case liberalization has multiple meanings: *Privatization: change of ownership from state monopoly to private hands *Commercialization: pursuing efficiency, cost-benefit analysis and profit maximization by introducing prices in comparison with the bill system proportional to property value *Commodification: standardization, pricing to address water scarcity according to the Dublin principles and the Hague declaration In a period of fiscal and ideological crisis, state failure is seen as the catalyst for liberalization, however the failure in assuring water quality can bee seen as a driver for economic and ecological reregulation (in this case coming from the European Union). More broadly the idea of a water market failure can seen as the explanation for state intervention, generating a natural monopoly of hydraulic infrastructure and the regulation of externalities such as water pollution. The situation however is not that simple, as the regulator may have the duty of introducing competition, which can be: *Direct competition or product competition *Surrogate competition *Competition for corporate control by mergers and takeovers *Procurement competition *Frachising Introduction of Water metering, metering can result in both restriction and increase of consumption with Marginal cost#Long run marginal cost, LRMC pricing being the regulator (Ofwat) preferred methodology.


Marketing

Businesses market their products/services to a specific Market segmentation, segments of consumers: the defining factors of the markets are determined by demographics, interests and age/gender. A small market is a niche market, while a big market is a mass market. A form of expansion is to enter a new market and sell/advertise to a different set of users. The marketing management school, evolved in the late 1950s and early 1960s, is fundamentally linked with the marketing mix framework, a business tool used in marketing and by marketers. In his paper "The Concept of the Marketing Mix", Neil H. Borden reconstructed the history of the term "marketing mix". He started teaching the term after an associate, James Culliton, described the role of the marketing manager in 1948 as a "mixer of ingredients"; one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried. The functions of total marketing include advertising, personal selling, packaging, pricing, marketing channel, channeling and warehousing. Borden also identified the market forces affecting marketing mix: *Consumer buying behavior *Trade's behavior (wholesale and retailing) *Competitors position and behavior: industry structure, product choice, oversupply, pricing and innovation *Governmental behavior: regulations Borden concludes saying that marketing is more an art than a science. The marketer E. Jerome McCarthy proposed a four Ps classification (Product (business), product,
price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by ...

price
, Promotion (marketing), promotion, Distribution (business), place) in 1960, which has since been used by marketers throughout the world. Robert F. Lauterborn proposed a four Cs classification (consumer,
price A price is the (usually not negative) quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by ...

price
, Promotion (marketing), promotion, Distribution (business), place) in 1990 which is a more consumer-oriented version of the four Ps that attempts to better fit the movement from mass marketing to niche marketing. Koichi Shimizu proposed a 7Cs Compass Model (
corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal ...

corporation
, commodity, cost, communication, Marketing channel, channel, consumer, Circumstances (rhetoric), circumstances) to provide a more complete picture of the nature of marketing in 1981.


Sociology


Economic rationality

Max Weber defines the measure of rational economic action as the: # Systematic distribution of utilities between present and future # Systematic distribution of utilities between various potential uses # Systematic production of utilities by manufacture or transportation by the owner of the means of production # Systematic acquisition by agreement of the powers of control and disposal over utilities, mainly by establishing corporate groups or by exchange Opposition of interests is typically resolved by bargaining or by Procurement, competitive biding: # Utilities, goods and labour are at the disposal of the individual without interference from others # Transportation can be seen as a part of the process of production # It is indifferent whether the individual is prevented from using force to interfere in the controls of others by means of a legal order, convention (norm), convention, Convention (norm), custom, self-interest or moral standards # Competition for the means of production may exist under various conditions # Anything which may be transferred between individuals by compensation may be an object of exchange # Conditions of exchange may be traditional, conventional (exchange of gifts) or rational (motivated by profit or need) # Regulations may threaten the source of supply Money may classified as: * Coined money is called "free money" or "market money" when it is coined by the Mint (facility), mint without limit of amount * It is called "limited" money or "administrative money" if the issue of coinage if subject to a corporate group * It is called regulated money if the kind and amount of coinage is subject to rules Weber defines: * Market situation: all the opportunities of exchanging a good for money which are know by the participants * Marketability: degree of regularity that a good tends to be an object of exchange in the market * Market freedom: degree of autonomy enjoyed by the participants in price determination and competition * Market regulation: restrictions on marketability and market freedom, done by tradition, convention, law, voluntary action Weber defines "formal rationality of economic action" to designate the extent of quantitative calculation or accounting and "substantive rationality" as the degree a group of persons is or could be adequately provided with good by means of oriented course of social action. A prominent entry-point for challenging the market model's applicability concerns exchange transactions and the ''homo economicus'' assumption of self-interest maximization. , a number of streams of economic sociology, economic sociological analysis of markets focus on the role of the social in transactions and on the ways transactions involve social networks and relations of Trust (social sciences), trust, cooperation and other bonds. Economic geographers in turn draw attention to the ways exchange transactions occur against the backdrop of institutional, social and geographic processes, including social class, class relations, uneven development and historically contingent path dependency, path-dependencies. Pierre Bourdieu has suggested the market model is becoming self-realizing in virtue of its wide acceptance in national and international institutions through the 1990s.


Abstraction, market agencement and framing

Michel Callon traces the history of how the market as a place (fairs, flea markets, fish markets) became an abstract concept (market for ideas, dating market, job market) which he calls the interface market model. This abstraction proceeds in three layers: * Sellers, buyers, platform goods * Competition * Institutions The interface market model thus establishes that: # Agents and goods are distinguable # A transfer is a communication of property rights # Competition develops between Agent (economics), agents # A transaction consists of monetary payments The limitations of this model are: # They do not take into account the material composition of market activities # They bracket out the constructive process of creating supply and demand, which leads to underestimating the crucial role played by bilateral transactions and the initiation of these transactions # They create unrealism through the concepts of Aggregation problem, aggregated supply and demand and bring about difficulties in comprehending the actual mechanisms for establishing prices # They create a total impasse on the complex processes that result in a separation between agents and goods # The hypothesis that goods are platforms precludes us from recognizing they are processes # A description of agents that underestimates their diversity, heterogeneity, and plasticity Callon offer the market agencements (heterogenous assemblage) model as an alternative, its features being: # Competition is the struggle to establish bilateral transactions which are never identical # Innovation is fundamental to commercial activity # Goods are processes # Profilerating agents, plastic identities and networking Market agencements function through Framing (social sciences), framing, that is action is oriented to a strategic goal (obtaining bilateral transactions), for example market oriented passiva(c)tion: # Detaches the good and liberates it from all those who participated in its elaboration and profiling # Renders it apt to provoke courses of actions and to contribute to their realization (that is, imbues it with uses) # Ensures that its behavior is at least to a certain extent controllable and predictable # Organizes the attribution and transfer of property rights Callon identifies the activities necessary for framing: # Rendering goods pass(act)ive # Activating agencies capable of evaluating and transforming these goods # Organizing their encounter # Ensuring the attachment of the goods to the agencies # Obtaining consent to pay # Setting a price and compelling payment–actions that combine and interweave with one another, with possible feedback loops and iterations


Embeddedness

Embeddedness expresses the idea that the economy is not autonomous but subordinated to politics, religion, and social relations. Polanyi’s use of the term suggests now familiar idea that market transactions depend on trust, mutual understanding, and legal enforcement of contracts. Michel Callon's concept of framing provides a useful Schema (Kant), schema: each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These social network, network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are “formatted” as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange under certain sets of rules. Therefore, for Challon, market transactions can never be disembedded from social and geographic relations and there is no sense to talking of degrees of embeddedness and disembeddeness. During the 20th century two common forms of critique were made: *Categories of 19th century social science such as Social class, class, modernity or Western world, the West were social constructions *These categories were artificial and not universal These are common themes in interpretive social science, cultural studies and post-structuralism. However, as Timothy Mitchell points out this mode of thought tends to put aside the real, the natural and nonhuman: the idea that a universal processes exists such as modernity, capitalism and globalization should not be taken for granted. An emerging theme is the interrelationship, inter-penetrability and variations of concepts of persons, commodities and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralist theorizing that draws on Michel Foucault and Actor-network theory, Actor Network Theory and stress relational aspects of person-hood, and dependence and integration into networks and practical systems. Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities.


Social systems theory

In social systems theory (cf. Niklas Luhmann), markets are also conceptualized as inner environments of the economy. As horizon of all potential investment decisions the market represents the environment of the actually realized investment decisions. However, such inner environments can also be observed in further function systems of society like in political, scientific, religious or mass media systems.


Economic geography

A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration and highlight geographic variations in the structures,
institution Institutions, according to Samuel P. Huntington Samuel Phillips Huntington (April 18, 1927 – December 24, 2008) was an American political scientist, adviser and academic. He spent more than half a century at Harvard University Har ...
s, histories, path dependency, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange. Reference to actual markets can show capitalism not as a totalizing force or completely encompassing mode of production, mode of economic activity, but rather as "a set of economic practices scattered over a landscape, rather than a systemic concentration of power". Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economy, developing economies, to informal markets,
barter In trade, barter (derived from ''baretor'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods or ...

barter
systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth centuries did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergent world economy. By their liberal nature, so called capitalist markets have almost always included a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements. Helpful here is J.K. Gibson-Graham's complex topology of the diversity of contemporary market economies describing different types of Financial transaction, transactions, Manual labour, labour and economic agents. Transactions can occur in
black market Barcelona 2015 A black market, underground economy or shadow economy, is a clandestine ''The ClanDestine'' (also known simply as ''ClanDestine'') is an appellation used to refer to the Destines, a fictional secret family of long-lived su ...
s (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of Public good (economics), public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: one cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability. This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets.Swedberg, 1994, p. 267 Gibson-Graham thus read a variety of alternative markets for fair trade and organic foods or those using local exchange trading system as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities.


Anthropology

Economic anthropology is a scholarly field that attempts to explain human economic behavior in its widest historic, geographic and cultural scope. Its origins as a sub-field of anthropology begin with the Polish-British founder of anthropology, Bronisław Malinowski, and his French compatriot, Marcel Mauss, on the nature of gift-giving exchange (or Reciprocity (cultural anthropology), reciprocity) as an alternative to market exchange. Studies in economic anthropology for the most part are focused on exchange but they a complex relationship with the discipline of economics, of which it is highly critical: for example Trobianders described by Malinowski deviate from rational self-interested individual.Malinowski, Bronislaw. Argonauts Of The Western Pacific - An Account of Native Enterprise and Adventure in the Archipelagoes of Melanesian New Guinea - Read Books Ltd. Bronisław Malinowski's path-breaking work, ''Argonauts of the Western Pacific'' (1922), addressed the question "why would men risk life and limb to travel across huge expanses of dangerous ocean to give away what appear to be worthless wikt:trinket, trinkets?". He begins by describing trade in the Polynesia, South Sea: The economic situation can vary considerably depending on the tribes and islands: for example the Gumawana villagers are know as efficient sailors and for their skill in pottery, they are, however, island monopolists keeping the trade in their owns hands without improving it. In a series of three expeditions, Malinowski carefully traced the network of exchanges of bracelets and necklaces across the Trobriand Islands and established that they were part of a system of inter-tribal exchange: it is know as the Kula ring, a closed circuit in which necklaces of red shells go in a clockwise motion and bracelets of white shell go in anticlockwise motion. Malinowski goes on to explain :: In the 1920s and later, Malinowski's study became the subject of debate with the French anthropologist, Marcel Mauss, author of ''The Gift (Mauss book), The Gift'' (''Essai sur le don'', 1925). Malinowski emphasized the exchange of goods between individuals and their non-altruistic motives for giving: they expected a return of equal or greater value (colloquially referred to as "Indian giving"). In other words, Reciprocity (cultural anthropology), reciprocity is an implicit part of gifting as no "free gift" is given without expectation of reciprocity. In contrast, Mauss has emphasized that the gifts were not between individuals, but between representatives of larger collectivities. He stated that this exchange system was clearly linked to political authority. He argued these gifts were a "total prestation" as they were not simple, alienable commodities to be bought and sold, but like the "Crown jewels" embodied the reputation, history and sense of identity of a "corporate kin group", such as a line of kings. Given the stakes, Mauss asked "why anyone would give them away?" and his answer was an enigmatic concept, "the spirit of the gift". A good part of the confusion (and resulting debate) was due to a bad translation. Mauss appeared to be arguing that a return gift is given to keep the very relationship between givers alive; a failure to return a gift ends the relationship; and the promise of any future gifts. Based on an improved translate, Jonathan Parry has demonstrated that Mauss was arguing that the concept of a "pure gift" given altruistically only emerges in societies with a well-developed market ideology. Rather than emphasize how particular kinds of objects are either gifts or commodities to be traded in restricted spheres of exchange, Arjun Appadurai and others began to look at how objects flowed between these spheres of exchange. They shifted attention away from the character of the human relationships formed through exchange and placed it on "the social life of things" instead. They examined the strategies by which an object could be "Commodity pathway diversion, singularized" (made unique, special, one-of-a-kind) and so withdrawn from the market. A marriage ceremony that transforms a purchased Wedding ring, ring into an irreplaceable family heirloom is one example whereas the heirloom, in turn, makes a perfect gift.


Mathematical modeling

Although arithmetic has been used since the beginning of civilization to set prices, it was not until the 19th century that data was systematically collected and more advanced mathematical tools began to be used to study markets in the form of social statistics. Business intelligence is also dated to 19th century, but it was with the rise of the computer that business analytics exploded. More recent techniques involve data mining and marketing engineering.


Size parameters

Market size can be given in terms of the number of buyers and sellers in a particular market or in terms of the total exchange of money in the market, generally annually (per year). When given in terms of money, market size is often termed "market value", but in a sense distinct from market value of individual products. For one and the same goods, there may be different (and generally increasing) market values at the production level, the wholesale level and the retail level. For example, the value of the global illicit drug market for the year 2003 was estimated by the United Nations to be US$13 billion at the production level, $94 billion at the wholesale level (taking seizures into account) and US$322 billion at the retail level (based on retail prices and taking seizures and other losses into account).United Nations, "2005 World Drug Report," Office on Drugs and Crime, June 2005, p. 16

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See also

* Grocery store * Knowledge market * Market economy * Market engineering * Market information systems * Market microstructure * Market town * Shopper marketing


References


Further reading

* Robert Pindyck, Pindyck, Robert S. and Daniel L. Rubinfeld, ''Microeconomics'', Prentice Hall 2012. * Robert H. Frank, Frank, Robert H., ''Microeconomics and Behavior'', 6th ed., McGraw-Hill/Irwin 2006. * Philip Kotler, Kotler, P. and Kevin Lane Keller, Keller, K.L., ''Marketing Management'', Prentice Hall 2011. * Baker, Michael J. and Michael Saren, ''Marketing Theory: A Student Text'', Sage 2010
online
* Patrik Aspers, Aspers, Patrik, ''Markets'', Polity Press 2011
online
* Bauer, Leonard and Herbert Matis (1988) ''From moral to political economy: The Genesis of social sciences'', History of European Ideas 9 (2), 125–143. * Nathaus, Klaus and David Gilgen (Eds.), ''Change of Markets and Market Societies: Concepts and Case Studies''. Historical Social Research 36 (3), Special Issue, 2011. {{Authority control Market (economics), Financial markets, *