Concept in Definition ABC

In economic terms, market is called the scenario (physical or virtual) where a regulated set of transactions and exchanges of goods and services between buying parties and selling parties involving a degree from competence among the participants based on the supply and demand mechanism.

There are different types of markets: such as retail or wholesale, those for raw materials and intermediate products, and also markets for stocks or stock exchanges.

Throughout history, different types of markets have been established: the former functioned through barter, that is, the exchange direct of goods through the valuation of the same. This system governed the economy throughout much of its history, although the circuit coexisted with the use of gold and silver coins. With the rise of money in a Format modern (in coins and banknotes, as used by the Mongol Empire and medieval China, with import of the idea to Europe in the time of Marco Polo) gave rise to transactions through codes of trade at national and international level, making use of communications and intermediaries increasingly complex. The current economic model requires a complicated interrelation in which the different currencies intersect national, local and international bond systems, the stock exchange circuit and customs movements, import and

export between countries and trade blocs.

A free competition market it is ideal when there are so many interrelated economic agents that none can interfere with certainty on the final price of a good or service; then, the market is said to regulate itself. This principle is upheld by the liberalism emerged in modern and contemporary times and constitutes the most widespread market system in developed nations.

When there are monopolies (a single producer) or oligopolies (a reduced number of producers), the system is in tension and is called imperfectly competitive market, since the producers are large enough to have an effect on the prices. The socialist and communist economic systems are based on a single producer / effector (the State); the risk of totalitarianism is very high in these cases. On the other hand, there are market models in which the State is not the only agent involved, but rather intervenes as a regulator or modulator of the activity. This method is applied with varying degrees of success in many countries or multinational institutions.

The perfect competition market not only does it have a high number of sellers and sellers that prevent the influence of each one on the final price, but also has product homogeneity, market transparency, freedom of entry and exit of companies, free access to information and to the resources and profit equal to zero in the long run.

When the market fails to achieve economic efficiency, for example, because the supply it makes of a good or service is not effective, it is said to be produced one of the so-called "market failure". These crises can occur for different reasons. When any of the components that constitute a market (producers, State, consumers, importers, exporters ...) is not correctly managed or occupies a role that it is unable to cope with, market failures can precipitate major disruptions in the lives of companies. people. Therefore, it is interesting to postulate that the market is not in itself a good or bad entity, but rather that its administration and regulation for the common good will be those that define whether the different financial movements have a satisfactory outcome for society as a whole.

Market Topics