Market structure

Market referred to in economics the meeting of supply and demand for an economic good (eg, a product or service ). The minimum market consists of a buyer, a supplier and a commodity. A market -based economy is called a market economy.

The basic principle of the market is the bargain. By using a generally accepted medium of exchange ( money for example ), the exchange " Good vs. Good " (power exchange) have the money to be separated in time.

The person price of a good, which leads to the compliance of offered and sought-after quantity, the so-called market equilibrium is called the market price.

In the model achieves a competitive economy, ie an economy in which all goods are traded freely on polypolistic markets in general equilibrium without external effects, a Pareto- efficient allocation of resources. ( First law of welfare economics ). A market situation in which the allocation of resources is not Pareto- efficient, is referred to in the neo-classical economics as a market failure.

Types of markets

Qualitative classifications

The market forms are qualitatively divided according to three criteria:

  • Perfect Market and Imperfect Market

See main article: Perfect Market

  • Organized and non-organized markets

In organized markets, the meeting and interaction of buyers and sellers governed by certain fixed rules. Examples are organized by Agency securities exchanges, or conducting auctions according to certain rules, such as bsp. with auction clocks in the fruit and vegetable auctions. For non- organized markets, these rules are missing.

  • Markets with limited and unlimited access

Restrictions may be purely of a legal nature, such as in investment, Neugründungs ​​, establishment or branch establishment bans, and Konzessionierungen. Legal and economic disabilities can be given by special taxes. Purely economic barriers are lack of capital or skill.

  • Combinations of the three types

These criteria may occur in various combinations. An example of a perfect, organized market with limited access is the stock market.

Types of markets according to the number of market participants - market form scheme

Markets can be divided into different market forms quantitatively by the number of buyers and sellers. The most common division of the market was buoyed by Heinrich Freiherr von Stackelberg. This shared in his ( morphological ) form of market scheme to market on the number of buyers and sellers, in the sense of competition, in the following schema:

In the presence of many suppliers and many buyers, each with small market shares, we also speak of an atomistic market structure or a competitive market.

If, however, only a few independent groups vendors present, one also speaks of monopolistic competition.

Types of markets on the demand intensity

In addition to these market forms are available in business administration yet:

Types of markets

Markets on the direction of the transaction

Depending on the direction of the performed transaction on the market differentiates procurement and sales markets. A procurement market is one such market where the view of procuring all providers of the products to be procured and all buyers, with which it competes for these products act. A market, however, is from the perspective of the provider, a market comprising all potential buyers of their products and at the same time, all providers with whom he is competing for the favor of customers.

Markets on the spatial expansion

Depending on the nature of the goods and the legal conditions, the prices of goods vary regionally varying degrees. This results in different sub-markets for the same commodity. These sub- markets can be divided according to spatial extent:

  • Local or regional markets are typical for products with high transport costs, faster Corruption and personal services. Examples are real estate markets and personal services such as hairdressers. Since substitution of the goods and services offered locally by the same goods and services in other locations is not possible, ask the local markets to the location of the pricing represents the price will vary locally due to the very low factor mobility.
  • National markets are typically produced by the national legal framework. Different tax laws and standards complicate an exchange of goods across national borders and provide for the emergence of national markets. In addition, national traditions, practices and language barriers. Thus have the same products in different countries different prices.
  • International markets are markets where trade process includes between market actors from different countries, but not all the world's countries are economically integrated with the market considered ( global market).
  • The world market represents the global market, where the world's traded goods and services have a uniform global world market price. This world market prices can differ by transportation costs, subsidies, tariffs and non-tariff barriers to trade heavily on the national and local prices.

The price equalization between spatially separated markets is done through arbitrage. If the markets are created by different legal conditions, there is an equalization of prices between markets on the black market and smuggling.

Markets for legal expansion

In the context of globalization, products are sold to many countries in the world. Since in each of those countries have different laws, technical regulations or infrastructure conditions may apply, it must be checked whether the products comply with the relevant laws and regulations. An example of this is the power supply, on different electrical voltage ( volt) or AC and DC current can be designed. The rules for the protection of electrical products may vary. This may mean that the products have to be adapted accordingly and technically produced in different variants. For certain products, the proof of a technical compliance is required, which is detected by a homologation. This applies, for example, s for motor vehicles ECE homologation. This is one of the reasons why vehicle manufacturers divide their sales plans accordingly.

Markets by product type

Goods market (including product market ) is the collective name for all markets for goods and services. It is divided into

  • Capital goods market
  • Consumer goods market

Factor market is the collective name for all markets for factors of production. These include:

  • Labor market
  • Property market
  • Capital market

Notwithstanding found in Homburg and Krohmer a division into consumer markets, industrial markets and markets for services before.

Markets for power distribution

Markets can also be according to the conditions prevailing on their distribution of power divide, for example in buyers markets and sellers markets: a buyer's market and seller's market ( engl. buyer 's market and seller 's market ) denote two extreme market situations. This refers to the market, whose contract terms are determined by the buyer or the seller, respectively. Conditions are discounts, payment terms, delivery terms, trading hours and trading places.

Causes for the better bargaining position of the buyer and seller are each an overhang of supply on low demand ( excess supply ) or scarce supply in very high demand ( excess demand ). Consequences of the buyer or seller market are mainly falling or rising prices and the favorable treatment of black markets and monopoly situations. The Spinnwebtheorem or the so-called pig cycle show follow as buyer and seller markets to each other and can each cause.

Market sizes

Market sizes are used for the quantitative description of markets. Known Description instruments for market sizes are:

  • Market capacity: Theoretical maximum size of the market, prices and purchasing power are not considered
  • Market potential: Total potential sales volume of a market. The market potential is the upper limit for the market volume
  • Market volume: sum of revenues actually received
  • Market share: Relative share of a provider of market volume
  • Market expansion: Concrete spatial extent of the relevant market

Without the definition of market expansion, market space, the other above-mentioned market variables can not be quantified. For example, place in a mortar retail chain stores for its various businesses locally, regionally, nationally, and possibly also internationally and globally very different market situations and conditions of competition before. National it might need to be in polypolistic, locally it may may act in a quasi - monopolistic situation and it can its national market share low, be its local market share high.

Market definition

A single market can generally differentiate with respect to four criteria:

  • Provider ( for example, " energy market" all suppliers who produce or sell energy )
  • Demanders (eg, " all non- market -worth private clients": all buyers who have a below average assets)
  • Products (eg " market for recreational activities " means all products / services that have to do with leisure)
  • Needs (eg, " security market " means any needs, establish the safety or create a sense of security )

Market behavior

Under market behavior describes the objectives, strategies, tactics, immediate actions and reactions of the individual economic agents in the competition market.

There are basically three possible categories of behaviors of providers and the buyers, each of which can occur as competitors with each other:

  • To act, that is, certain market parameters of price, quality, service, etc. to set and gain competitive advantages
  • To respond to actions of competitors (ie given market parameter changes to follow. This is the typical way in a functioning competition )
  • Nothing to do (this is almost always economically disadvantageous because a competitive disadvantage )

Market saturation

Under market saturation is defined as the achievement of specific uptake volume. If this volume is reached, no further goods in that market may be deducted, that is, the market is saturated.

The degree of saturation is determined by the ratio of market volume market potential.

Market actors

  • Demand: from a business perspective are buyers (potential) customers who purchase the products on markets in order to satisfy their needs.
  • Provider: providers compete on markets to win the favor of customers to achieve through the sales of their products and profitability to survive economically.
  • Distribution partners: partners cooperate in the sale of the products of a supplier to the demander with that.
  • State institutions: have government institutions in markets primarily a regulatory role with respect to the market events, such as the prevention of market failure due to statutory obligations and prohibitions; secondary, however, may government at markets also act as suppliers and / or buyers.
  • Interest groups: Associations in markets, which include trade associations and consumer groups are trying to influence markets so that the interests of their interest group be maintained regarding the market events.

Market functions

  • Pricing (coordination function)
  • Market clearing (trade at the market price and exclusion )
  • Allocation of goods and factors of production
  • Pension education, consumer surplus and producer surplus
  • Efficiency improvement
  • Promotion of innovation
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