Market Structure and Pricing
Meaning and Definition of Market
Market generally means a place or a geographical area, where
buyers with money and sellers with their goods meet to exchange goods
for money. In Economics market refers to a group of buyers and sellers
who involve in the transaction of commodities and services.
Characteristics of a market
Existence of buyers and sellers of the commodity.
The establishment of contact between the buyers and sellers.
Distance is of no consideration if buyers and sellers could contact
each other through the available communication system like
telephone, agents, letter correspondence and Internet.
Buyers and sellers deal with the same commodity or variety. Since
the market in economics is identified on the basis of the commodity,
similarity of the product is very essential.
There should be a price for the commodity bought and sold in the
Classification of Markets
A) Market according to Area
Based on the extent of the market for any product, markets can
be classified into local regional, national and international markets.
A local market for a product exists when buyers and sellers of
commodity carry on business in a particular locality or village or area
where the demand and supply conditions are influenced by local
conditions only. E.g. Perishable goods like milk and vegetables and
bulky articles like bricks and stones.
When commodities are demanded and supplied throughout the
country, there is national market e.g. wheat, rice or cotton
Commodities that are demanded and supplied over a region have
When demand and supply conditions are influenced at the global
level, we have international market. e.g. gold, silver, cell phone etc.
On the basis of demand and supply, this geographical classification
is made. With improved transport facilities and communications, even
goods of local markets can become international goods.
B) Market according to time