In ordinary sense, a market is a place where things are bought and sold. But in economic sense, a market is a place or region, where buyers and sellers have free competition with one another. The buyers and sellers may not be at one place. They may have free intercourses by means of post, telegraphs, telephones etc. Therefore, in the economic sense, the term market is applied to commodities and buyers and sellers or the same who are in direct competition with one market to another.
Essentials of Market: The following are the essentials of a market,
1. A commodity.
2. The large number of buyers and sellers.
3. An area or region which may be a village, a city, a country, or the whole world.
4. Competition between buyers and sellers.
When there is a perfect competition between buyers and sellers, there can be only one price for the commodity at any given time. Some allowance may be made for cost of transportation from one part of the market to another.
Markets may be classified in respect of (a) space (b) time.
Under space, we may have,
1. Local market
2. National market
3. International market
Under time, we may have,
1. Short period market
2. Moderately long period market
3. Long period market
4. Secular market or long period market
When commodity is brought and sold only within or near its place of production, it has local market e.g. fresh vegetables, milk etc.
When the area of the market covers a whole country, the whole commodity is said to have National Market.
When competition in the case of a commodity is world-wide the market is said to be international.
This division of market refers to the period for which the market for any commodity exists.
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