The market is a complex system of economic relationsand relations between entities that participate in the processes of production, consumption, distribution or exchange of various goods and services at appropriate market prices, formed on the basis of a supply-demand balance, taking into account competition.
The essence of the market
In the market there is interaction of buyers andsellers. Agreements and contracts arise between them, according to which various transactions are carried out with agreed terms of interaction. Market participants are all business entities - from private households to the state. At the same time, a significant role in this interaction is assigned to intermediaries who can simultaneously act as sellers and as buyers.
The essence of the market is a mechanisminteraction of consumers who demand the goods, and sellers who form the offer of the product. At the same time, the products themselves are the objects of the market. The concept of goods is not limited only to material things. It can be services, resources, currency, securities, government benefits, etc.
To build adequate relationships, participantsmarket need information about the supply and demand for the product. The essence of the market is also in the transmission of this information - usually in the form of prices. The number of incoming goods and services, the amount of income of customers, the increase in their needs form a supply and demand that ensures the continuous functioning of the market.
In general, the essence and functions of the market are as follows:
- Coordination of the needs of buyers and the ability of sellers, which occurs by identifying the relationship between supply and demand in this segment of the market.
- Enabling buyers to choosethe necessary goods and services, and sellers - the most attractive sales markets. This is made possible by the free movement of goods, labor, capital, both within the country and between states.
- Stimulating the reduction in production costs, so that sellers can bid on their goods in the range between the market price and the cost price.
- Improvement of the state of the country's economy through the use of bankruptcy and self-liquidation of firms that offer substandard, too expensive or out-of-date goods and services.
Thus, pricing processes,mediation, regulation, informativity and sanitation determine the essence of the market. All these functions are performed by the direct economic entities in the course of the sale and purchase operations. With the help of the market, economically isolated buyers and sellers can form the necessary links, thus creating a variety of market structures.
There are many classifications of such structures. First of all, the markets can be divided into two large segments: goods and services. Then they split into smaller parts. Depending on the industry of production of goods and services, this may be the markets of industrial goods, food, resource markets, etc.
There is also a division according to the types of productive resources used: land markets, information, capital, labor, etc.
Separate segments are also fragmented into smaller onesstructure. For example, in the field of information, there are separate markets for scientific and technological developments, innovations, and technologies. And in the financial environment there are separate markets for securities (stock), currencies, etc. All of them fulfill their tasks and satisfy the narrow specific needs of customers. For example, the essence of the foreign exchange market is to regulate the processes of exchange, buying and selling currencies at the most varied levels of interaction of economic entities.
On a territorial basis, markets can be local, intraregional, national, or international.
Depending on the availability of competition, there are monopolistic, oligopolistic or free-competitive markets.
As we can see, there are many classifications and ways of dividing into segments. The variety of markets grows in proportion to the growth of human needs and opportunities.