Concept of Market

• Market refers to an arrangement, where buyers and sellers come in contact with each other directly or indirectly, to buy or sell goods.
• Face to face contact of buyer and seller is not necessary for market. E.g. In share market, the buyer and seller do their transactions through internet.
• Markets are dependent on two major participants: –

1. Buyers 2. Sellers

Buyers and sellers typically trade goods, services and/ or information.

Important Features of a Market

• A market has following features:

Commodity – There must be a commodity which is being demanded and sold

Buyers and sellers – There must be buyers and sellers of the commodity

Communication – There must be communication between buyers and sellers

• Structure of Market:

Monopoly market – In India the government has monopoly in atomic energy, defence, public water supply system, railways, etc.

Perfectly Competitive market – Large number of sellers and buyers, Homogeneous product, Free entry and exit, Maximum profit for seller, Buyers have perfect knowledge about the product and Government protection without any interference etc.

Market Structure in Real World Situation

• The situation of monopoly or perfect competition is not seen in real world. The type of market that actually exist is called monopolistic or imperfect competition.
• In perfect competition there are many sellers selling a single product without any advertisement, in this case there are many sellers selling different variations of particular product.