Market (Economics)

As in business administration (BWL), the model of supply and demand is also used in economics (VWL) to understand and regulate the interaction between consumers and producers in the markets.

Definition / explanation

The market is an institution or a place where sellers and potential buyers meet in order to exchange certain goods or services (so-called scarce goods) for money.

From a functional point of view, it is therefore also said that at this point supply and demand meet. The sellers of a good are on the supply side and the buyers on the demand side.

The market (VWL)

The reason for the emergence of such a market is the demand for satisfaction of needs on the part of the consumers and in particular the need arising from this, which meets the supply of the producers on the market in the form of demand.

Types of markets

Subdivision according to qualitative criteria
A distinction must be made between different types of markets. First of all, a classification according to qualitative criteria is possible, of which there are three forms that can be combined to represent a market:

  • Perfect market and imperfect market
  • Organized and Unorganized Markets
  • Markets with restricted and unrestricted access

Subdivision according to quantitative criteria
In addition to the qualitative classifications, markets can also be divided into various forms according to quantitative criteria. The number of suppliers and buyers on the market is decisive here. Examples:

Subdivision according to the direction of the transaction carried out
A subdivision also takes place in the form of the procurement or sales market, in which the distinction always depends on the direction of the transaction.

Subdivision according to spatial extent
As a result of spatial expansion and the emergence of sub-markets, there are also local or regional, national or international markets for the same good. There is also the global world market.

Subdivision according to legal extent
Due to the different laws that apply to transactions between different countries, legal aspects must also be observed and checked and, if necessary, differentiated again.

Subdivision by product type
A distinction can also be made based on the type of goods. It can either be a goods market with consumer goods (goods for end consumers) or production goods (goods for producers). The Factor market dar on the Factors of production be bought and sold, for example on the labor, real estate and capital markets.

Division according to distribution of power
Ultimately, a subdivision can take place according to the distribution of power prevailing in the market, for example into buyers 'and sellers' markets.

Market participants / market players

Market participants are primarily private individuals (citizens), various state institutions, banks, companies and abroad. The only requirement is that these groups actively participate in the market, i.e. actually offer or at least request goods and / or services.

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