AGENDA

 AIMS AND OBJECTIVES

 INTRODUCTION TO MARKETS/ VARIOUS DEFINITIONS TO MARKETS
 WHY DO WE NEED MARKETS?
 FEATURES OF MARKET
 UNDERSTANDING MARKETS
 FORMS OF MARKETS
 TYPES OF MARKETS
 HOW DO MARKETS WORK AND HOW ARE THEY REGULATED?
 CONCLUSION
 TERMS TO KNOW PAGE..
 SOURCES OF INFORMATION
 MARKET
In economics, a market is a composition of systems, institutions,
procedures, social relations or infrastructures whereby parties engage in
exchange. While parties may exchange goods and services by barter,
most markets rely on sellers offering their goods or services to buyers in
exchange for money.

What is a market explain?

Definition: A market is defined as the sum total of all the buyers and
sellers in the area or region under consideration. The area may be
the earth, or countries, regions, states, or cities. The value, cost and price
of items traded are as per forces of supply and demand in a market.
A market is described as the total sum of all the purchasers and sellers in
the area or region being considered. The area may be the earth, country,
region, state, or city. The worth, expense and cost of traded items are
according to the supply & demand forces of a market

The market is presented as a form that is for the cultural advantage of the
general public. The market structure comprises different types of
markets, and the structures are portrayed by the nature and the level of
competition that exists for the goods and services in the market. The
forms of the market, both for the products market and the factor market
or the service market, is to be decided by the idea of rivalry that is winning
in a specific kind of market.
The Market structure is an expression that is resultant for the quality or
the adequacy of the market competition that is winning in the market.
There are seven primary market structures:

 Monopoly
 Oligopoly
 Perfect competition
 Monopolistic competition
 Monopsony
  Oligopsony
 Natural monopoly

Meaning of a Market:
A market can be characterised as where a couple of parties can meet,
which will expedite the trading of products and services. The parties
involved in the market activities are the sellers and the buyers. A market
is an actual structure like a retail outlet, where the dealers and purchasers
can meet eye to eye, or in a virtual structure like an internet-based market,
where there is the truancy of direct, actual contact between the
purchasers and vendors.

Types of the market:

Monopoly:
A monopolistic market is a market formation with the qualities of a pure
market. A pure monopoly can only exist when one provider gives a
specific service or a product to numerous customers. In a monopolistic
market, the imposing business organisation, or the controlling
organisation, has the overall control of the entire market, so it sets the
supply and price of its goods and services. For example, the Indian
Railway, Google, Microsoft, and Facebook.

Oligopoly:
An oligopoly is a market form with a few firms, none of which can hold
the others back from having a critical impact. The fixation or
concentration proportion estimates the piece of the market share of the
biggest firms. For example, commercial air travel, auto industries, cable
television, etc.

Perfect competition:
Perfect competition is an absolute sort of market form wherein all end
consumers and producers have complete and balanced data and no
exchange costs. There is an enormous number of makers and customers
rivalling each other in this sort of environment. For example, agricultural
products like carrots, potatoes, and various grain products, the securities
market, foreign exchange markets, and even online shopping websites,
etc.

Monopolistic competition:
Monopolistic competition portrays an industry where many firms offer
their services and products that are comparative (however somewhat
flawed) substitutes. Obstructions or barriers to exit and entry in
monopolistic competitive industries are low, and the choices made of any
firm don’t explicitly influence those of its rivals. The monopolistic
competition is firmly identified with the business technique of brand
separation and differentiation. For example, hairdressers, restaurant
businesses, hotels, and pubs.

Monopsony:
A monopsony is a market situation wherein there is just a single
purchaser, the monopsonist. Just like a monopoly, a monopsony
additionally has an imperfect market condition. The contrast between a
monopsony and a monopoly is basically in the distinction between the
controlling business elements. A solitary purchaser overwhelms a
monopsonist market while a singular dealer controls a monopolised
market. Monopsonists are normal to regions where they supply most of
the locale’s positions in the regional jobs. For example, a company that
collects the entire labour of a town. Like a sugar factory that recruits
labourers from the entire town to extract sugar from sugarcane.

Oligopsony:
An oligopsony is a business opportunity for services and products that is
influenced by a couple of huge purchasers. The centralisation of market
demand is in only a couple of parties that gives each a generous control
of its vendors and can adequately hold costs down. For example, the
supermarket industry is arising as an oligopsony with a worldwide reach.

Natural monopoly:
A natural monopoly is a kind of a monopoly that can exist normally
because of the great start-up costs or incredible economies of scale of
directing a business in a particular industry which can bring about huge
barriers to exit and entry for possible contenders. An organisation with a
natural monopoly may be the main supplier of a service or a product in an
industry or geographic area. Normally, natural monopolies can emerge in
businesses that require the latest technology, raw materials, or similar
factors to work. For example, the utility service industry is a natural
monopoly. It consists of supplying water, electricity, sewer services, and
distribution of energy to towns and cities across the country.

Forms of Market in India – blooming to Their Best!

In a bigger market area like our country, there can operate many
different types of Market. India is a country of varied types of people,
with different tastes and styles, and hence entering in Indian market
results in a varied outgrowth. Thus, different forms of the market find
the best place to thrive in our country.

There are many markets where exists a large number of buyers and a
lesser number of sellers. Incredibly! there is also a large number of
sellers while a single buyer! We will study these amazing markets in
this content. Without further ado let us delve into the forms of
market.

Introduction of the Market Structure

The market is introduced as a structure that is for the societal benefit
of the society. The market structure consists of various forms of
market, the forms are characterized according to the nature and the
degree of competition that exists in the market for the goods and
services. The structure of the market both for the goods market and
the service or the factor market is to be judged by the nature of
competition that is prevailing in a particular type of market.

The Market form is a state that is resultant for the quality or the
effectiveness of market competition that is prevailing in the market.
There are seven main market forms:
 Perfect Competition
  Monopolistic Competition
 Monopoly
 Monopsony
 Natural monopoly
 Oligopoly
 Oligopsony.

What is the meaning of Market?

A market can be defined as a place where two parties can gather,
which will facilitate the exchange of goods and services. The parties
that are involved are usually the buyers and sellers. A market is a
physical form like a retail outlet, where the sellers and buyers can
meet face-to-face, or in a virtual form like an online market, where
there is an absence of direct physical contact between the buyers and
sellers.

‘Market’ is a term used in many instances like the securities market or

the normal physical market where the people come together for the
procedure of buying and selling.

Forms of Market in Economics

The variety of market structures characterizes an economy. These
market structures essentially refer to the degree of competition in a
market.

The other determinants of market structures include the nature of the

goods and product, the number of sellers, the number of consumers,
the nature of the product or the services, economies of scale, etc. Let
us discuss the basic types of market structures in any economy.

1. Perfect Competition
In a perfect competition type of market structure, there is a large
number of buyers and sellers, where each of them is competing
against each other. There is no big or influential seller in the market.
Hence the sellers in this market are known as price takers.

2. Monopolistic Competition
This competition is a realistic scenario. In monopolistic competition,
there are a large number of buyers as well as sellers. But the
difference is that they all do not sell homogeneous products. The
products are similar but all sellers sell differentiated products. The
sellers here can charge a marginally higher price as they enjoy a
dominant position in this form of market structure.

3. Oligopoly
In an oligopoly structure, few firms are existing in the market. In this
type of market structure, the buyers are far greater than the sellers.
The firms in the case of Oligopoly, either compete with another or
collaborate. They use their market influence to set the prices and then
maximize their profits. So, here the consumers become the price
takers. In an oligopoly, there are various barriers to entry into the
market, and new firms find it difficult to establish their foothold in this
type of market structure.

4. Monopoly
In a monopoly type of market structure, there is a single seller, here
this single seller means the single firm will control the entire market
structure. It can set any determined price of its wishes since it has all
the market power under its dominance. The consumers do not have
any alternative to paying the price set by the seller.

Monopolies are the most undesirable form of market structure. Here

the consumer loses all their power and thus the market forces
become irrelevant. However, a pure monopoly is rather rare in reality.

FAQs on Forms of Market

1. What is the Degree of Competition?

Competition Degree means the power or the influence that a firm

creates over the market which eventually affects the whole structure
and thus the system works according to the competition.

The Four Competition Degrees are: 

 Perfect competition, which primarily means that there are a large

number of sellers in the market who competes for customers. 

 Monopolistic competition, in this type of competition, there are

many sellers, who produce quite similar products, but the
customers see their products as differently, which created the
competition. 

 The third is Oligopoly, where few firms compete or collab against

or with each other

 The fourth is the Monopoly, which means a single seller.

 A market is a place where buyers and sellers can meet to facilitate

the exchange or transaction of goods and services.
 Markets can be physical like a retail outlet, or virtual like an e-
retailer.
 Other examples include illegal markets, auction markets, and
financial markets.
 Markets establish the prices of goods and services that are
determined by supply and demand.
 Features of a market include the availability of an arena, buyers and
sellers, and a commodity.

Understanding Markets
A market is any place where two or more parties can meet to engage in
an economic transaction—even those that don't involve legal tender. A
market transaction may involve goods, services, information, currency, or
any combination of these that pass from one party to another. In short,
markets are arenas in which buyers and sellers can gather and interact.

Two parties are generally needed to make a trade. But, at minimum,

a third party is required to introduce competition and bring balance to the
market. Beyond this broad definition, the term market encompasses a
variety of things, depending on the context. For instance, it may refer to
the stock market, which is the place where securities are traded. It may
also be used to describe a collection of people who wish to buy a specific
product or service in a specific place. Or it could refer to an industry or
business sector, such as the global diamond market.

Types of Markets
Markets vary widely for a number of reasons, including the kinds of
products sold, location, duration, size, and constituency of the customer
base, size, legality, and many other factors. Aside from the two most
common markets—physical and virtual—there are other kinds of markets
where parties can gather to execute their transactions.

Underground Market
An underground or black market refers to an illegal market where
transactions occur without the knowledge of the government or other
regulatory agencies. Many illegal markets exist in order to circumvent
existing tax laws. This is why many involve cash-only transactions or
non-traceable forms of currency, making them harder to track.

Many illegal markets exist in countries that are economically developing

and with planned or command economies where the government
controls the production and distribution of goods and services. When
there is a shortage of certain goods and services in the economy,
members of the illegal market step in and fill the void.

Illegal markets can also exist  in developed economies. These shadow

markets, as they're also known, become prevalent when prices control
the sale of certain products or services, especially when demand is high.
Ticket scalping is one example of an illegal or shadow market. When
demand for concert or theater tickets is high, scalpers will step in, buy up
a bunch, and sell them at inflated prices on the underground market.

Auction Market
An auction market brings many people together for the sale and
purchase of specific lots of goods. The buyers or bidders try to top each
other for the purchase price. The items up for sale end up going to the
highest bidder.

The most common auction markets involve livestock, foreclosed homes,

and art and antiques. Many operate online now. For example, the U.S.
Treasury sells its bonds, notes, and bills via regular auctions.1

Financial Market
The blanket term financial market refers to any place where securities,
currencies, bonds, and other securities are traded between two parties.
These markets are the basis of capitalist societies, and they provide
capital formation and liquidity for businesses. They can be physical or
virtual.

The financial market includes the stock exchanges such as the New York
Stock Exchange (NYSE), Nasdaq, the London Stock Exchange (LSE),
and the TMX Group. Other kinds of financial markets include the bond
market and the foreign exchange market, where people trade currencies.

Features of a Market
There are certain features that help define a market. These are
necessary in order for the market to function. The following are the most
basic characteristics that shape a market:

 Arena: This is the platform where transactions are conducted

between buyers and sellers. Keep in mind that this doesn't
necessarily mean a physical location. It can also mean the area in
which all parties involved are spread out.
 Buyers and Sellers: In order for the market to function, there must
be buyers and there must be sellers. The market can't exist if
someone isn't buying something that someone else is selling. These
entities can be businesses, individuals, or even governments, and
they can execute their transactions physically or virtually, thanks to
the internet.
 One Commodity: A single market is dependent on a single
commodity, so in order for a market to operate, a related commodity
must be present. For instance, wheat is the commodity bought and
sold in the wheat market. Electronics make up the electronics
market en masse but can be broken down into subcategories.

There are other features, including competition, pricing, and the freedom
to buy and sell goods and services.
Regulating Markets
Other than underground markets, most markets are subject to rules and
regulations set by a regional or governing body that determines the
market’s nature. This may be the case when the regulation is as wide-
reaching and as widely recognized as an international trade agreement,
or as local and temporary as a pop-up street market where vendors
maintain order and rules among themselves.

How Do Markets Work?

Markets are arenas in which buyers and sellers can gather and interact.
A market in a state of perfect competition is necessarily characterized by
a high number of active buyers and sellers. The market establishes the
prices for goods and other services. These rates are determined by
supply and demand. Supply is created by the sellers, while demand is
generated by buyers. Markets try to find some balance in price when
supply and demand are themselves in balance.

What Is a Black Market?

A black market refers to an illegal exchange or marketplace where
transactions occur without the knowledge or oversight of officials or
regulatory agencies. They tend to spring up when there is a shortage of
certain goods and services in the economy, or supply and prices are
state-controlled. Transactions tend to be undocumented and cash-only,
all the better to be untraceable.

How Are Markets Regulated?

Most markets are subject to rules and regulations set by a regional or
governing body that determines the market’s nature. They can be
international, national, or local authorities.

The Bottom Line

Markets are an important part of the economy. They allow a space where
governments, businesses, and individuals can buy and sell their goods
and services. But that's not all. They help determine the pricing of goods
and services and inject much-needed liquidity into the economy. By
offering a place to conduct transactions, markets allow entities access to
the capital they need to further their interests, whether that's to fund
infrastructure, fulfill growth plans, make purchases, or invest their money.
This helps fuel innovation in order to secure a competitive edge in the
marketplace.
In conclusion, the concept of market structure is central to both
economics and marketing. Besides, there are difference feature in these
four common types of market structure which is perfect competition,
monopolistic competition, oligopoly and monopoly...

https://www.theia.org/

Markets are important. They are the mechanism through which shares in
companies are bought and sold, and they give businesses access to
cash. Markets are critical in price formation, liquidity transformation and
allowing firms to service the needs of their clients.

In recent days, the markets have been incredibly turbulent as a result of

the Covid-19 pandemic and there has been some press speculation that
public markets might close as a result. However whilst they have indeed
been volatile, they have operated in an orderly manner and market
infrastructure has held up well to the large volume of trades.

Investment managers - and the wider financial services industry - are as

a matter of priority, continuing to focus on ensuring the orderly function of
markets and serving our clients’ needs through this testing time. It is my
view that any closure would have the opposite effect to that intended and
even the rumor of market closures can lead to panic selling.

That’s why last week I wrote to the Bank of England and the Financial
Conduct Authority (FCA) - to set out that the industry supports the
continued opening of public markets. Our industry wants to work with
Government, jointly with all other financial industry stakeholders, to
ensure that public markets remain open through the global pandemic.
And it’s not just us. We’ve joined a global call to authorities around the
world to signal that markets must continue to operate.

Price discrimination is a selling strategy that charges customers different

prices for the same product or service based on what the seller thinks
they can get the customer to agree to. In pure price discrimination, the
seller charges each customer the maximum price they will pay. In more
common forms of price discrimination, the seller places customers in
groups based on certain attributes and charges each group a different
price.

KEY TAKEAWAYS

With price discrimination, a seller charges customers a different fee for

the same product or service.

With first-degree discrimination, the company charges the maximum

possible price for each unit consumed.

Second-degree discrimination involves discounts for products or services

bought in bulk, while third-degree discrimination reflects different prices
for different consumer groups.

1:32

Price Discrimination

Understanding Price Discrimination

Price discrimination is practiced based on the seller's belief that

customers in certain groups can be asked to pay more or less based on
certain demographics or on how they value the product or service in
question.

Price discrimination is most valuable when the profit that is earned as a

result of separating the markets is greater than the profit that is earned
as a result of keeping the markets combined. Whether price
discrimination works and for how long the various groups are willing to
pay different prices for the same product depends on the relative
elasticities of demand in the sub-markets. Consumers in a relatively
inelastic submarket pay a higher price, while those in a relatively elastic
sub-market pay a lower price.

Price discrimination charges customers different prices for the same

products based on a bias toward groups of people with certain
characteristics.
With price discrimination, the company looking to make the sales identify
different market segments, such as domestic and industrial users, with
different price elasticities. Markets must be kept separate by time,
physical distance, and nature of use.

For example, the Microsoft Office Schools edition is available for a lower
price to educational institutions than to other users.

The markets cannot overlap so that consumers who purchase at a lower

price in the elastic sub-market could resell at a higher price in the
inelastic sub-market. The company must also have monopoly power to
make price discrimination more effective.

Types of Price Discrimination

There are three types of price discrimination: first-degree or perfect price

discrimination, second-degree, and third-degree. These degrees of price
discrimination are also known as personalized pricing (1st-degree
pricing), product versioning or menu pricing (2nd-degree pricing), and
group pricing (3rd-degree pricing).

First-Degree Price Discrimination

First-degree discrimination, or perfect price discrimination, occurs when a

business charges the maximum possible price for each unit consumed.
Because prices vary among units, the firm captures all available
consumer surplus for itself or the economic surplus. Many industries
involving client services practice first-degree price discrimination, where
a company charges a different price for every good or service sold.

Second-Degree Price Discrimination

Second-degree price discrimination occurs when a company charges a
different price for different quantities consumed, such as quantity
discounts on bulk purchases.

Third-Degree Price Discrimination

Third-degree price discrimination occurs when a company charges a

different price to different consumer groups. For example, a theater may
divide moviegoers into seniors, adults, and children, each paying a
different price when seeing the same movie. This discrimination is the
most common.

Examples of Price Discrimination

Many industries, such as the airline industry, the arts/entertainment

industry, and the pharmaceutical industry, use price discrimination
strategies. Examples of price discrimination include issuing coupons,
applying specific discounts (e.g., age discounts), and creating loyalty
programs. One example of price discrimination can be seen in the airline
industry. Consumers buying airline tickets several months in advance
typically pay less than consumers purchasing at the last minute. When
demand for a particular flight is high, airlines raise ticket prices in
response.

By contrast, when tickets for a flight are not selling well, the airline
reduces the cost of available tickets to try to generate sales. Because
many passengers prefer flying home late on Sunday, those flights tend to
be more expensive than flights leaving early Sunday morning. Airline
passengers typically pay more for additional legroom too.

Is Price Discrimination Illegal?

The word discrimination in price discrimination does not typically refer to

something illegal or derogatory in most cases. Instead, it refers to firms
being able to change the prices of their products or services dynamically
as market conditions change, charging different users different prices for
similar services, or charging the same price for services with different
costs. Neither practice violates any U.S. laws—it would become unlawful
only if it creates or leads to specific economic harm.

Wouldn’t Consumers Be Better Off If Everybody Paid the Same Price?

In many cases, no. Different customer segments have different

characteristics and different price points that they are willing to pay. If
everything were priced at say the "average cost," people with lower price
points could never afford it. Likewise, those with higher price points could
hoard it. This is what is known as market segmentation. Economists have
also identified market mechanisms whereby fixing static prices can lead
to market inefficiencies from both the supply and demand sides.

Product differentiation focuses on distinguishing its product from others. Price

discrimination aims to charge different prices to different customers for the same product. Usage.
Product differentiation is useful across all sectors and industries. Price Discrimination is useful
across some sectors and industries.