Commerce

By 
JAMES CHEN




Updated August 02, 2021

Reviewed by 
MICHAEL J BOYLE
Fact checked by 
AMANDA JACKSON

What Is Commerce?
Commerce is the conduct of trade among economic agents. Generally,
commerce refers to the exchange of goods, services, or something of value,
between businesses or entities. From a broad perspective, nations are
concerned with managing commerce in a way that enhances the well-being
of citizens, by providing jobs and producing beneficial goods and services.

KEY TAKEAWAYS

 Commerce has existed from the early days of human civilization when
humans bartered goods to the more complex development of trade
routes and corporations.
  Today, commerce refers to the macroeconomic purchases and sales of
goods and services by organizations.
 Commerce is a subset of business that focuses on the distribution
aspect of business as opposed to the production side.
 The buying or selling of a single item is known as a transaction,
whereas all the transactions of that item in an economy are known as
commerce.
 Commerce leads to the prospering of nations and an increased
standard of living, but if left unchecked or unregulated, it can lead to
negative externalities.
 E-commerce is a variant of commerce in which goods are sold
electronically via the Internet.

Understanding Commerce
Commerce has existed from the moment humans started exchanging goods
and services with one another. From the early days of bartering to the
creation of currencies to the establishment of trade routes, humans have
sought ways to exchange goods and services and build a distribution process
around the process of doing so.

Today, commerce normally refers to the macroeconomic purchases and

sales of goods and services by large organizations at scale. The sale or
purchase of a single item by a consumer is defined as a transaction, while
commerce refers to all transactions related to the purchase and sale of that
item in an economy. Most commerce is conducted internationally and
represents the buying and selling of goods between nations.

It is important to note that commerce does not have the same meaning as
"business," but rather is a subset of business. Commerce does not relate to
the manufacturing or production process of business but only the distribution
process of goods and services. The distribution aspect encompasses a wide
array of areas, such as logistical, political, regulatory, legal, social, and
economic.

Implementation and Management of Commerce

When properly managed, commercial activity can quickly enhance the
standard of living in a nation and increase its standing in the world. However,
when commerce is allowed to run unregulated, large businesses can become
too powerful and impose negative externalities on citizens for the benefit of
the business owners. Many nations have established governmental agencies
responsible for promoting and managing commerce, such as the Department
of Commerce in the United States.

Large organizations with hundreds of countries as members also regulate

commerce across borders. For example, the World Trade
Organization (WTO) and its predecessor, the General Agreement on Tariffs
and Trade (GATT), established rules for tariffs relating to the import and
export of goods between countries. The rules are meant to facilitate
commerce and establish a level playing field for member countries.

The Rise of Ecommerce

The idea of commerce has expanded to include electronic commerce in the
21st century. Electronic commerce, or ecommerce, describes any business
or commercial transaction that includes the transfer of financial information
over the Internet. Ecommerce, unlike traditional commerce between two
agents, allows individual consumers to exchange value for goods and
services with little to no barriers.

Ecommerce has changed how economies conduct commerce. In the p