11.10.

2015

1. What is a market?
2. What is money?
Topic 4. Markets 3.
4.
Classification of market
Market structure
5. Market infrastructure
6. Types of market economies

• Market is a medium that

allows buyers and sellers of a specific good or
service to interact in order to facilitate an exchange.
• Markets may come in the form of physical locations
where transactions are made
• Markets facilitate trade and enables the
distribution and allocation of resources in a society.
• Markets allow any trade-able item to be evaluated
and priced.
• A market emerges more or less spontaneously or
may be constructed deliberately by human
interaction in order to enable the exchange of
rights (property rights) of services and goods.

Preconditions for a market

• 1. Division of work Some parties may exchange goods and services
• 2. Spatially separated buyer and seller by barter
• 3. Private property Barter is a system of exchange
where goods or services are directly exchanged for
other goods or services without using a medium of
exchange, such as money

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The main functions of money are:

• Money is any item or verifiable record that is
generally accepted as payment for goods and
services and repayment of debts
1. a medium of exchange;
2. a unit of account;
3. a store of value;
4. a standard of deferred payment (an accepted way to
settle a debt – a unit in which debts are denominated,
and the status of money as legal tender). When debts are
denominated in money, the real value of debts may
change due to inflation and deflation.

Any item or verifiable record that fulfills these

functions can be considered money

1. Classification Of Market On The

Basis Of Geographical Area
• Price is_the quantity of payment or compensation 1. Local Market
given by one party to another in return for goods or 2. Regional Market
services.
3. National Market
• In modern economies, prices are generally
expressed in units of some form of currency. 4. International Or Global Market

2. Classification Of Market On The 3. Classification Of Market On The

Basis Of time Basis Of Volume Of Business
1. Short-term Market 1. Wholesale Market
2. Medium-term Market 2. Retail Market
3. Long-term Market

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4. Classification Of Market On The Basis Of Nature Of Product

a. Commodity Market
b. Financial Market
5. Classification Of Market On The Basis Of Consumption
a. Consumer Market Competition is the rivalry among sellers trying to
b. Industrial Market achieve such goals as increasing profits, market share,
6. Classification Of Market On The Basis Of Nature Of Transaction and sales volume by varying the elements of the
a. Spot Market marketing mix: price, product, distribution, and
b. Future Market promotion
7. Classification Of Market On The Basis Of Control
a. Regulated Market
b. Non-regulated Market
8. Classification Of Market On The Basis Of Legality
a. Legal
b. Illegal

Market structure
Features Perfect Imperfect competition • Perfect competition, a theoretical market structure
competition Monopolistic Oligopoly Pure that features no barriers to entry, an unlimited
competition monopoly
Number of Large Many A few One
number of producers and consumers
companies (two and more)
Type of goods Homogeneous Differentiated Homogeneous Doesn’t have
/Differentiated substitutes
Impact on None, Some Depends on Limited by
price “pricetaker” the other demand
competitors “pricesetter”
Entry/Exit None Low High Very high
Barriers
Examples None (but: Commodities Mobile Government
Forex) networks services

Monopolistic competition, a type of imperfect • Oligopoly, in which a market is run by a small

competition such that many producers sell products number of firms that together control the majority
or services that are differentiated from one another of the market share.
(e.g. by branding or quality) and hence are not • Duopoly, a special case of an oligopoly
perfect substitutes. In monopolistic competition, a with two firms.
firm takes the prices charged by its rivals as given
and ignores the impact of its own prices on the
prices of other firms

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• Monopoly, where there is only one provider of a
product or service
• Monopsony, when there is only a
single buyer in a market.
• Banking system is the
structural network of institutions that offer financia
l services. The members of the banking system
includes: commercial banks and investment banks
that take deposits and make loans, and
national central banks that issue currency and
set monetary policy.
• Logistics Center is a center in a defined area within
which all activities relating to transport, logistics
and the distribution of goods - both for national
and international transit, are carried out by various
operators on a commercial basis.
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• Market institutions are a network of commercial
organizations (such_as manufacturers, producers,
wholesalers, retailers, and buyers) who generate,
distribute, and purchase goods and services
• Market infrastructure can be considered to
embrace a wide range of organizations and
institutions that make market activity possible
• An Exchange, or Bourse, is a highly
organized market where (especially)
tradable securities, commodities, futures, and
options contracts are sold and bought.
• Stock exchange (securities exchange);
• Commodity exchange (futures exchange)
• Trade fair is an exhibition organized so that
companies in a specific industry can showcase and
demonstrate their latest products, service, study
activities of rivals and examine recent market
trends and opportunities
4

• A market economy is an economy in which
decisions regarding investment, production,
and distribution are based on supply and
demand, and prices of goods and services are
determined in a free price system.
• The major defining characteristic of a market
economy is that investment decisions and the
allocation of producer goods are mainly made by
negotiation through markets
• The East Asian model of capitalism involves a
strong role for state investment, and in some
instances involves state-owned enterprises.
• The state takes an active role in promoting
economic development through subsidies, the
facilitation of "national champions", and an export-
based model of growth.
• The actual practice of this model varies by country
such as Singapore, Japan, Taiwan, South Korea and
the People's Republic of China.
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• Anglo-Saxon model refers to the form of capitalism
predominant in Anglophone countries and typified
by the economy of the United States
• Characteristics of this model include levels
of regulation and taxes being low, and the public
sector providing fewer services. It can also mean
strong property rights, contract enforcement, and
overall ease of doing business as well as low
barriers to free trade.
• Social market economic model is based upon the
idea of realizing the benefits of a free market
economy, especially economic performance and
high supply of goods, while avoiding disadvantages
such as destructive competition, concentration of
economic power and anti-social effects of market
processes.
• The aim of the social market economy is to realize
greatest prosperity combined with best possible
social security.