Meaning of market
In common parlance, the word 'market' refers to a place where buyers and sellers of goods come together to make deals with each other.
In economics, the word 'market' is used in a very broad sense. In economics, the word 'market' refers to the entire area where buyers and sellers of a particular product compete among themselves and establish a single price for the product for the entire area.
Market definitions
Various economists have defined the market as follows:
1. According to Sidgwick- A market is a group of humans in which such commercial relations have been established so that everyone can easily know at what prices other people exchange some goods and services from time to time.
2. According to Cournot- A market is not a special place where the buying and selling of goods takes place, but it is an area in which there is free interaction between sellers and customers so that the prices of a commodity can be changed easily and quickly. A tendency towards equality should arise.
3. According to Eiy- We mean the market as that general area within which the forces that determine the prices of a particular commodity are at work.
4. According to Jevons- The word market means any group of people who have business relations and who do mixed business in any commodity.
Essentials of a market
1. Area
In economics, the word 'market' does not refer to any particular place, rather the market is understood as the entire area in which sellers and buyers are spread and they compete freely among themselves. As far as the buyers and sellers of any item are spread, that entire place is called a 'market'. This area may include one or two villages or cities or even several nations. A businessman sitting in Allahabad can buy and sell clothes not only from Kanpur, Mumbai, and Ahmedabad but also from Singapore, New York, or London. Thus the clothing market includes customers from these areas.
2 One Commodity
In economics, the market is considered to be a single commodity. In practice, we can buy more than one item in one place, like ghee, fruits, clothes, sweets, etc., but in economics, the market for each item is considered separate, like ghee market, fruit market, etc. In short, as many goods are there, as many markets are considered for them in economics.
3. Buyer and Seller
Both buyers and sellers are important and integral parts of the market. Therefore, a market cannot be imagined in the absence of buyers and sellers, but there is no fixed number of buyers and sellers in the market. Their number may be less or more.
4. Perfect Competition
There should be free competition between buyers and sellers in the market. Free competition means that there should not be any restrictions on buyers and sellers while making deals.
5. One Price
When there is free competition between buyers and sellers in the market, the result will be that the price of the commodity will be the same at a time. If the price of a commodity is different in different regions, then due to the functioning of the forces of demand and supply they tend to become the same.
Based on these characteristics of the market, its definition can be given in this way: market does not mean any place but rather the entire area where buyers and sellers of any commodity are spread in which there is free competition which leads to a result, the price of that item is the same everywhere.
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Classification of market
Market classification can be done from the following points of view:
1. Classification according to area
There are four types of markets from the area point of view:
(a) Local market- When the exchange of a commodity by its buyers and sellers is limited to a particular place, then it is called the local market of that commodity. These markets are usually for such goods as:
- Are perishable (vegetables, milk, meat, fish) or
- Despite being heavier, they are less valuable (stones) or
- are consumed only by the caste living in a place; Due to this, production is also local, like backward caste clothing, etc.
(b) Provincial Market- The goods that are bought and sold in the entire state or province are called provincial markets.
(c) National market- When the buying and selling of any item is not limited to any place, province, or state but is nationwide. That is, if its buyers and sellers are spread across the country, then the market of such a commodity is called national, like jowar, ghee, mango, gram, and pulses.
(d) International market- If any commodity is bought and sold in different parts of the world and its buyers and sellers are found all over the world, then the market of that commodity will be called international, like gold, wheat, cloth, etc.
2. Classification according to time
From the point of view of time, markets can be of the following types:
(a) Daily or very short-term market- This is the market in which the seller does not get time to increase the supply of the product, hence in this type of market, the price is affected only by demand. Generally, the market for perishable items like greens, vegetables, fish, etc. is very short-lived.
(b) Short-term markets- These are such markets in which the supply of goods can be increased only to some extent as compared to the daily market. Since supply cannot be increased in proportion to demand; Therefore, demand and supply have more influence in determining the prices of these goods.
(c) Long-term market- The period of the long-term market is so long that when the demand decreases, the producer can reduce the supply of the product and can increase its supply when the demand increases. In this type of market, demand and supply have an equal influence on price determination.
(d) Very long-term market- In a very long-term market the period is so long that the producer can make the goods according to the nature, interest, and fashion of the consumer; New industries can be established and the production of goods can be increased to any extent. In other words, the supply of a good is very elastic compared to the demand. In such a market, supply has more influence on price determination.
3. Classification according to the Process of Sale
There are four types of markets based on the method of sale:
(a) Sale of goods to be sold through inspection in the market- buying and selling of cows, horses, goats, etc. is possible only after their inspection.
(b) Market of sale of certified goods by sample- Many items like soap, powder, cream, etc. are bought and sold after seeing the sample.
(c) Market of sale of goods by grading- in which buying and selling of goods is done by the name of the grade, for example, there are four grades of Dehradun rice – Dehradun no. 1, Dehradun No. 2, etc. Only by their names do producers and consumers understand the goods and buying and selling of goods takes place.
(d) Market of sale by trademark- In which the purchase and sale of goods are done only based on the trademark of the product, such as Pehalwan Chaap Bidi, Bandar Chaap Manjan, etc. are sold based on trademark only.
4. Classification based on specialization
There are two types of markets based on specialization:
(a) Mixed market- in which buying and selling of many types of goods takes place simultaneously.
(b) Specialized market- in which only one commodity or its variety is bought and sold, like a bullion market.
5. Classification according to Quantity of Sale
There are two types of markets based on sales volume:
(a) Retail market- In which small quantities of goods are bought and sold.
(b) Wholesale market- In which goods are bought and sold in bulk quantities.
6. Classification based on legality
On this basis also the market can be divided into two parts:
(a) Legitimate market- When goods are bought and sold in the market as per government rules and are received, then such market is called a legitimate market. Every person gets goods at a fair price
(b) Illegal or thief market- When the sellers of any item sell it at more than the fixed price, then such market is called a thief market. In such a market, buying and selling of goods is not done according to government rules.
7. Classification according to competition
Based on competition, there are three types of markets:
(a) Market of perfect competition- A perfect market is called that market in which-
- There are many buyers and sellers of goods;
- There is free and complete competition among them;
- All buyers and sellers have knowledge about where the item is being sold in the market and at what price and
- A commodity has only one price at a time in the entire market.
In the words of Benham, "A market is said to be complete when all possible buyers and sellers have immediate knowledge of the prices at which transactions take place and at which buyers and sellers are ready to buy or sell goods." In such a situation, the price of the product will remain the same in the entire market after excluding transportation expenses and import taxes.
(b) Market of imperfect competition- An imperfect market is called that market in which-
- There is the absence of perfect competition;
- There are less number of buyers and sellers;
- Buyers and sellers do not have complete knowledge of the market;
- More than one price of the same item prevails at a time.
In the words of Benham, "The market is incomplete when buyers or sellers or both do not know the prices demanded or given by others."
Kinds of Imperfect Competition
Countless situations of imperfect competition are found. In this vast area full of indiscretions, three major distinctions can be made, the results of which vary from each other:
(i) Duopoly- Duopoly means a market situation in which there are only two producers of a product and both sell the same product; The goods of both producers are generally similar. Both are independent in their production work, and the products of both compete with each other. If both of them start working together in production or sale, then the situation of duopoly will end and a situation of monopoly will arise.
(ii) Oligopoly- Oligopoly means few sellers. If the total supply of a product is done by a few firms or a few individuals, then it is called a situation of oligopoly. In this stage, due to less number of sellers, they remain conscious about the supply of the item and its price. The reason for this is that the business policy of one seller affects others also. In this way, there is an interrelation between the price and production policy of all the sellers.
(iii) Monopolistic Competition- This term was first used by Prof. Chamberlain. Is. He said that in the practical world, we neither find a situation of complete competition nor of complete monopoly, but a situation in between these two. Where there is differentiation in the production of many firms in the market, there is a market condition of monopolistic competition.
(c) Monopoly market- Monopoly market is that market in which-
- There is only one producer or seller of the good;
- He has no rival; And
- There is no substitute for his product in the market.
In short, when there is no competition at all among the sellers of a product, that condition is called monopoly.
Which form of market is most popular in India
India is a developing economy and is moving on the path of economic development at a very fast pace. The industrialization of the country is happening at a rapid pace. In India, a situation of complete competition is seen in agricultural commodities because
(a) Agricultural products are mainly homogeneous. For example, there is not much difference between the variety of wheat obtained from Krishnakumar's field and Ramkumar's field.
(b) Generally, total agricultural production is the result of the combination of innumerable small units. No individual producer can independently influence the total supply of agricultural production significantly. Therefore, even if Krishnakumar decides to produce less due to low prices, his decision will not have any impact on the total agricultural output.
(c) Every agricultural producer acts as a price-taking firm. No individual producer can independently determine the price of agricultural produce.
But in most of the industrial goods, like cement, paper, machines, motor cars, etc., Indian industries have been considered to be in a state of oligopolistic competition due to the influence of a few producers, but due to rapid industrialization in the country, there is product differentiation and increase in the number of producers. An environment of monopolistic competition is being created. In countries like America, Britain, Japan, Canada, etc., which are quite developed from the industrial point of view, more effect of monopolistic competition is seen.
As far as public services like transportation, water supply, electricity, gas, etc. are concerned, the situation in many respects is one of monopoly.
Scope of market
Meaning of market expansion-
The market of a product can be narrow or wide. The market is called narrow when the demand for a particular product remains in a limited area only. On the contrary, when the number of buyers and sellers of a particular commodity is large and they are spread over a large area, it is called a wide market.
Reasons for Expansion: Market expansion depends on the following two elements:
(a) Attributes of Goods,
(B) Internal Conditions of the Country.
(a) Properties of the object
The expansion of the market of any commodity depends to a great extent on the internal qualities of the commodity which are as follows.
1. Breadth of Demand- If the demand for a product is wide and regular, then its market will also be wide. Conversely, the market will be narrow if demand is limited. For example, because the demand for wheat is wide, its market is also so wide and widespread.
2. Supply of goods- If the supply of any goods is in large quantity and can be increased quickly according to the demand, then its market will be wide. In the opposite situation, the market for the product will be narrow.
3. Durability of the object- The durable objects. Their market is relatively wider because these goods can be kept for longer periods and can be sent to distant places. On the contrary, the market for perishable goods like fruits, milk, vegetables, etc. is not wide.
4. Affordability- The goods that can be sent from one place to another easily and at low cost will have a wide market, but the goods that lack these qualities will have a narrow market. For this reason, the market for goods like gold, silver, etc. is wide and the market for bricks, sand, etc. is narrow.
5. Facility of grading and sampling- The market is often wide for such goods whose samples can be made of good quality or which cannot be manufactured. Can be divided into different meads. Earlier the market of wheat, rice, cotton, etc. was very limited but ever since their trees have been made, their market has also expanded.
6. Availability of substitute goods- The market for a product for which various substitute goods are available everywhere is generally narrow. The reason for this is that when a demand arises for that item to fulfill a need, then it can be fulfilled by that particular item as well as by its other substitute items, due to which the sales area of the item gets reduced. Is.
(b) Internal conditions of the country
Along with the characteristics of the product, the internal conditions of the country also affect the expansion of the market. Internal conditions may include the following:
1. Peace and security- Peace and security are indispensable for a wide market, hence in a country where peace, security, and good governance exist, the markets of goods are wide, and where there is civil war, riots, social unrest, And political upheavals etc. keep happening, there the area of markets gets limited.
2. Development of means of transport and communication- With the development of means of transport and communication, goods can be transferred from one place to another quickly and at low cost, due to which the market of goods is not limited only to the borders of the country. , he becomes international.
3. Currency and credit system- In a country where the currency system is strong, well organized, and stable and the banking system is well organized, the market for goods also expands because it encourages trade and commerce.
4. Trade-related policy of the government- If the government adopts the policy of free trade then the markets of various goods expand. On the contrary, if the government imposes high import taxes and export taxes to control foreign trade, the market area is narrowed. 5. Division of Labour: Since division of labor increases the need for exchange, the market for goods also expands.
6. Modern business policies- The size of the market also depends on the sales-related policies. The goods which are systematically advertised and promoted are more in demand and have a wider market.
7. Business situation- During the recession period, due to widespread unemployment, the buying and selling of goods reduced, as a result, their market also became narrow, but during the boom period, due to an increase in buying, selling,, and production activities, various types of goods are sold. The market for goods expands.