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However, in overall economic terms the market means that all persons and organizations involved in some form in the purchase and sale of goods and services or the use thereof. To define the market in the more specific sense, must be related with other variables, such as product or a particular area.
addition, the main function of bringing together suppliers and consumers and regulate, through the price mechanism, the exchange of goods and services.
In the market there are various actors influence each other, resulting in a dynamic process of relationships between them. At the same time, the market is surrounded by several environmental factors exert a greater or lesser extent a certain influence on the relationships and structures of the same.
The market is also the social environment (or virtual) that fosters the conditions for exchange. In other words, be interpreted as the institution or social organization through which the suppliers (producers and sellers) and purchasers (consumers or buyers) of a particular good or service, enter into close business relationship to carry out numerous transactions. The first markets in history worked through barter.
After the appearance of money, started to develop commercial codes that ultimately gave rise to modern national and international companies. As production increased, communications and brokers began to play a greater role in the markets ..
Depending on various criteria, establishing different types:
1. According to market obligations under the laws of the country where you are, include:
a) Market free if there is freedom of transactions. b) Market involved, whether prices, quantities traded, or both are imposed from outside the market.
2. Given the amount of information available both buyers and sellers on their proposals for the sale, include:
a) Transparent when market players are strongly related and have all the information possible. In these markets, buyers know the bids of the sellers and sellers, know the potential demand for a buyer. Therefore, in such markets as a single price.
b) With frictions, when on the contrary, officers did not have all the information. Therefore, in this case there are different prices for the same product.
3. According characteristics of the goods, which is the subject of the transaction, we can distinguish between:
a) Perfect Market, one in which the goods are perfectly homogeneous. Thus, the buyer is indifferent to acquire a vendor or another.
The conditions that Perfect Market shall comply are:
• Product homogeneity
• Mobility unrestricted resources
• Clearance product total
• Large number of sellers and buyers
• Free attendance
• Information and rationality of the agents.
b) imperfect market, where the same merchandise is available in several models with different characteristics. In this case, says the market is differentiated.
4. According to available agents involved in the market, are generally:
a) normal market where neither buyers nor sellers have the power to intervene in the price, because their trading volume is insignificant compared to the total traded in the market. In this case, to buyers and sellers are called price-takers.
b) forced Market, where either buyers or sellers can act on the price or quantities traded.
5. Considering the number of participants , both the supply side as the demand, we obtain the following type of market:
We can perform a market classification based on the number of participants, is as follows:
....................................... ... Many buyers .....
............... A single seller monopoly of Bid; few sellers ........ Offer ........ Oligopoly; Many sellers Perfect Competition ........... ..................
Few buyers .............................
A single vendor ......... ...... Offer limited monopoly; few vendors .............. Bilateral oligopoly; Many sellers ..........
demand oligopoly
.......................................... A single buyer .....
................. A single vendor bilateral monopoly; few vendors ...... Monopoly ......... limited demand; Many sellers ........... Monopoly Demand
Combining the above five criteria, we encounter a large number of market arrangements. In the following sections we will study some of them, although it should be noted that these models (simplified representation of a given economic reality.) Theorists who can hardly find an exact reflection of reality.
To understand this, remember that a competitive market is one in which there are many buyers and many sellers, so that each has a negligible influence on the market price.
(a) The monopoly:
A single bidder supplying the demand.
There is only one bidder. The monopolist is going through a domain, which can impose the most convenient prices.
The market demand curve is a major constraint for the monopolist.
The product is homogeneous: there is only one well. There
entry barriers: When there are windfall profits to companies wishing to enter may not do so due to high barriers to entry.
monopoly has no supply curve.
Common features between monopoly and perfect competition. There
a homogeneous product.
The condition of profit maximization.
But of course also have their differences, among which we highlight .....
The number of bidders.
The monopoly is a sole supplier who is responsible for supplying all the demand, but in perfect competition, the number of bidders is high.
The total amount produced and the market price.
(b) The oligopoly.
imperfectly competitive market where a few companies control the supply without reaching any agreements among themselves.
There are few bidders. The oligopoly
each bidder can affect the price varying its offer because the firm size is large relative to market supply.
The supply curve facing the firm is decreasing.
If a company increases the price of your product, you lose customers to competitors. By contrast, if reduced, increase your customer gets while the rest of the bidders is reducing its sales.
The product is homogeneous.
entry barriers exist
AGREEMENTS BETWEEN COMPANIES:
oligopolistic If a company cuts prices and not competent, it is increased as the demand also increase their income.
This causes that there is stiff competition among companies in this market, so willing to participate a greater percentage of market share.
If all firms cut prices is not modified in any way the percentage of participation and results in a decrease in income, could even lead to economic bankruptcy, but fortunately for corporate bankruptcy case not is given.
Because of these assumptions and to try to avoid companies enter into agreements, called "cartels."
agreements emphasize quantity and price agreements:
amounts The agreement involves the distribution of participation rates in the other market supply between various companies offering it.
The price agreement is the sale price is fixed from the pact between the different companies.
c) The perfectly competitive market and how it works ...
Perfect Competition Market studies the mechanisms by determining the quantity and the equilibrium price in a market. The analysis of the elasticities of supply and demand is the core of this market.
Perfect Competition Market studies the conditions under which all markets are simultaneously in equilibrium. It states that: "All goods are complementary other or to substitute a greater or lesser degree ".
Due to the existing general interdependence, any accidental displacement of equilibrium in the market for a good cause shifts in the markets of other goods, they in those of others and so on. These price changes may in turn produce a retroactive effect on the original market. Finally, if no external interference that hinders, that process will lead to balance in all goods and factor markets .
As we have explained, the market Perfect Competition is perhaps the "purest" of all market models, by establishing conditions optimal for the exercise of commercial activity, and nothing can direct the specific behavior of economic factors.
Thus we can say that perfect competition is only the result of the discipline of producers within a market model that has rules that must be respected at all times.
Where all important producers so they finally offered to consumers, not the size, nor the economic power that have, we could say that the market is this model which provides more opportunities for all producers since all have the same percentage of ownership, and all have the same opportunities to enter in a specific market, under equal conditions and equal opportunities.
Similarly, we can say is this market that offers more benefits to consumers, as these who concentrate power that empowers them to decide whether to consume, how to do it and who consume, is how this model market gives a number of advantages to consumers, and somehow the producers subjected to the decisions and preferences with the former.
d) Monopolistic Competition
Monopolistic competition is a market rate characterized by:
- A large number business.
- Differentiated products together that consumers do not consider perfect substitutes.
- Some ability of sellers to set prices freely.
- Freedom to enter and exit the market.
- Great importance of operations other than price to differentiate products from each company.
Monopolistic competition is a common market. Almost all retail transactions are part of this form of market. Small businesses in all sectors are in this category. Establishing a business is relatively easy, but keep it not so easy: it takes skill to convince customers that a product is different and better than competitors' products.
Conclusion:
In conclusion, the market rates are a useful classification because it can identify the context of markets according to their geographical location, types of clients exist, the established competition, the type of product, the kind of resources and groups of non-clients, all of which is fundamental to answer four crucial questions:
1) What products will enter the market?, 2) By what distribution system ?,
3) at what price? and 4) what promotional activities will done to raise awareness of the company's offer?.
Thus we can say that perfect competition is the ideal way to trade, not so much for producers who are constantly threatened their market share, but for end users, who are enjoying the benefits that free competition and tender offer to consumers, who have to meet your needs a huge range of options, wide, but limited to the time since the course requires that all products must be the same.
Thus, I present the other side to perfect competition, in which a single producer monopolizes the whole market or shared it with others, this Monopoly concerns. Where fierce fighting is not just for more profit, but to grab the largest market segment, using all legal or illegal methods and do not give up its interest to anyone or anything. As an oligopoly, a lighter form of Monopoly, here, the struggle is so fierce, and competitors share the market share and establishing an effective market communication, and all are aware other's movements.
Thus, we conclude that there is a perfect market and perfect competition is the main shortcoming is that it is utopian. The only thing that does exist is a trade or an economic process in which prevailing ethics, business values \u200b\u200band putting the common welfare above the profit at any cost and at any cost.
We can say that today's economy and has been unable to set severe restrictions on the markets, and today the economic process requires that factors involving the rise to the occasion, and be aware not only of what happens within your organization, but also of social responsibility which have, no matter what the market model to follow, what matters is that exercised with responsibility and ethics to the role assigned to the process of economy either locally or globally, and that includes many different aspects, such as market models themselves.
And now, as a team, trbajar the concepts and provide jobs in the section "Comments" ... Well done and good luck!
Sources:
Economy, J. Philip Foj and others. Edit. Algaida.
Microeconomics, Dominick Salvatore, Ed McGrawHill, Mex. 1998
Lolín Raul Che Che
Inmaculada P. Amorós
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