The market is an entity that relates the individual who is looking for a good, product or service with the individual who offers it. Likewise, market is the physical or virtual place where sellers and buyers come to make transactions, following the principles of supply and demand
For a better understanding of the market, two important concepts must be understood: supply is the quantity of goods and services that sellers are willing to offer at a certain price. While demand is the express formulation of a desire that is conditioned by the available resources of the individual or entity seeking a good or service.
Types of market in economics
There are three classic classifications of market types according to the sector of the economy in which they are located:
Stock market – financial
It is a type of capital market that serves to establish negotiations of both fixed and variable income, through purchase and sale operations focused on any type of value that can be negotiated.
In the financial market, assets, products and financial instruments are negotiated and a public price of the assets is set by the interaction of supply and demand.
See also: supply, demand and the law of supply and demand.
Labor or employment market
They are the relationships established between a group of people seeking employment and a group of employers who demand certain professional profiles for their companies or projects.
Depending on the country, the labor market is delimited by laws that establish some relevant aspects such as minimum wage, agreements and benefits for workers, number of working hours allowed, etc.
Services and goods market
It refers to all transactions between individuals and companies that have as their purpose the purchase and sale of tangible, intangible products or services. It is classified into four categories:
Wholesale market: consists of the sale of large quantities of products to both companies and consumers. Generally, wholesale market transactions occur between product producing companies and distributors.
Retail market or for lessR: is one that sells directly to the consumer and in small quantities.
Intermediary market: aims to purchase products for subsequent resale.
Types of market according to competition
According to the distribution of the suppliers and demanders of a service, the market is classified as:
Perfect competition market
In a perfectly competitive market, the setting of the price of a product or service is the result of the reciprocal interaction between supply and demand.
Imperfectly competitive market
These are markets in which there is a marked asymmetry between supply and demand, which can be caused by multiple factors (economic, political, cultural, etc.). Within the imperfectly competitive market there are two major classifications.
Monopoly
It is the domain of the offer of a good or service by an individual or company. In this case, lacking competition, the supplier has the power to decide the price and quantity of products available, so those who demand the service have little or no ability to choose according to their needs.
Oligopoly
In this type of markets there is more than one supplier, but also many buyers (demand). In these cases, although competing companies have control of the market and can set the price of the products, they also have a smaller market share, since demand is distributed among them.
See also Market types and their classification.
Black market and legal market
The black or illicit market consists of the trafficking of prohibited goods at prices different from the legal market.
The black market arises in times of crisis or periods of economic restrictions, which makes access to certain products or services difficult. This generates the emergence of an illegal market in which bidders sell goods at prices well above their real value, but which end up being acquired because demand requires it.
For its part, the legal market refers to products and services regulated according to the price, taxes and fees established by the legislation of a country.
Market in advertising and marketing
In the area of marketingmarket is a set of current and potential consumers who use a product or service to satisfy their own needs.
In this area the term is also used target market, which refers to the recipient of a product or service. To know a target market, marketing studies consumer behavior to be able to segment it according to different categories (gender, age, city of residence, tastes and interests, etc.) and thus design the most convenient advertising strategies.
Types of market in trade
Depending on the destination of the transactions, the market is classified into:
Internal market
Also known as internal trade, it is characterized because the transactions are carried out between buyers and sellers of the same nation, which is why they are regulated by the same commercial laws.
External market
Also called international trade, it is the set of exchanges of products and services between foreign countries, so these transactions are regulated by international rules, treaties, agreements and conventions.
The term market comes from the Latin “mercatus which means market or traffic.
See also: