Market Definition:
An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.
Meaning
Markets include following methods-
(1) Determining price of the traded item,
(2) Communicating the price information,
(3) Facilitating deals and transactions, and
(4) Effecting distribution.
The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it.
Types of Markets
Physical Markets
Non Physical Markets/Virtual markets
Auction Market
Market for Intermediate Goods
Black Market
Knowledge Market
Financial Market
1) Physical Markets
Physical market is a set up where buyers can physically meet the sellers and purchase the desired merchandise from them in exchange of money.
Shopping malls, department stores, retail stores are examples of physical markets.
2) Non Physical Markets/Virtual markets
In such markets, buyers purchase goods and services through internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is done through internet. Examples - Rediff shopping, eBay etc.
3) Auction Market
In an auction market the seller sells his goods to one who is the highest bidder.
4) Market for Intermediate Goods:-
Such markets sell raw materials (goods) required for the final production of other goods.
5) Black Market
A black market is a setup where illegal goods like drugs and weapons are sold.
6) Knowledge Market
Knowledge market is a set up which deals in the exchange of information and knowledge based products.
7) Financial Market
Market dealing with the exchange of liquid assets (money) is called a financial market.
• Financial markets are of following types:
Stock Market -
A form of market where sellers and buyers exchange shares is called a stock market.
• Bond Market
A market place where buyers and sellers are engaged in the exchange of debt securities, usually in the form of bonds is called a bond market.
A bond is a contract signed by both the parties where one party promises to return money with interest at fixed intervals.
• Foreign Exchange Market
In such type of market, parties are involved in trading of currency.
In a foreign exchange market (also called currency market), one party exchanges one country’s currency with equivalent quantity of another currency.
• Predictive Markets
Predictive market is a set up where exchange of good or service takes place for future.
The buyer benefits when the market goes up and is at a loss when the market crashes.
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