What Is a Market?

A market is any place where sellers of particular goods or services can meet with buyers of those goods and services. It creates the potential for a transaction to take place. The buyers must have something they can offer in exchange for the product to create a successful transaction. 

There are two main types of markets – markets for goods and services and markets for the factors of production. Markets can be classified as perfectly competitive, imperfectly competitive or monopolies, depending on their features.

Terms Related to Market

A free market economy is dictated by supply and demand. "Free" refers to the lack of governmental control over price and production. 

Market failure occurs when an imbalance exists between supply and demand. More of a product is produced than is demanded, or more of a product is demanded than is produced. 

A complete market is one that has components in place to address virtually any eventual circumstance. 

Resources on Market 

Here are a few starting points for research on market if you're writing a term paper or maybe just trying to educate yourself because you're contemplating launching a business. 

Good books on the subject include the "Dictionary of Free-Market Economics," by Fred E. Foldvary. It is literally a dictionary encompassing just about any term you might encounter dealing with free market economics. 

"Man, Economy, and State with Power and Market" is by Murray N. Rothbard. It's actually two works gathered in one tome explaining Austrian economic theory. 

"Democracy and the Market" by Adam Przeworski discusses "economic rationality" as it relates to and interacts with democracy.

Journal articles on market that you may find enlightening and useful include The Econometrics of Financial Markets, The Market for "Lemons": Quality Uncertainty and the Market Mechanism, and Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk.

The first is offered by Cambridge University Press and was written by three economics scholars to address empirical finance. 

"The Market for "Lemons" is written by George A. Akerlof and is available on the JSTOR website. As the title implies, this paper discusses the various rewards for sellers who produce and market merchandise and products that are, quite simply, of poor quality. One might think manufacturers would avoid this like the plague ... but maybe not. 

Capital Asset Prices is also available from JSTOR, initially published in the Journal of Finance in September 1964. But its theories and principles have stood the test of time. It discusses the challenges inherent in being able to predict capital markets.

Admittedly, some of these works are very highbrow and may be difficult for those just wading into the area of economics, finance, and market to digest. If you'd like to get your feet a little wet first, here are some offerings from ThoughtCo. to explain some of these theories and principles in plain English like how markets use information to set prices, the role of the market, and the effects of a black market using supply and demand.

Sources

Foldvary, Fred E. "Dictionary of Free-Market Economics." Hardcover, Edward Elgar Pub, December 1, 1998.

Murray N. Rothbard, "Man, Economy, and State with Power and Market, Scholar's Edition." Joseph T. Salerno (Introduction), Paperback, 2nd edition, Ludwig von Mises Institute, May 4, 2011.

Przeworski. "Democracy and the Market." Studies in Rationality and Social Change, Cambridge University Press, July 26, 1991.