Markets

Markets are arrangements that enable buyers and sellers to exchange goods, services, or financial assets, typically through a system of prices determined by supply and demand. They coordinate decisions, allocate resources, and provide information about relative scarcity. Markets can be physical or digital, local or global, and can be organized as marketplaces, exchanges, or over-the-counter networks. Common market types include goods and services markets, labor markets, financial markets (equities, bonds, derivatives), and commodity markets. In a well-functioning market, prices rise when demand exceeds supply and fall when supply outpaces demand, guiding producers to adjust output and consumers to adjust purchases. Intermediaries such as brokers, dealers, and exchanges facilitate trades, provide liquidity, and reduce transaction costs.

Market participants include buyers, sellers, investors, firms, governments, and institutions. Prices act as signals and incentives, reflecting scarcity, preferences, and information. Markets rely on competition, property rights, contract enforcement, and information transparency. Market failures can occur due to externalities, public goods, information asymmetries, or monopolies, leading to the justification for regulation or policy measures. Government involvement may include monetary and fiscal policy, antitrust enforcement, consumer protection, and public provision of goods.

Markets have evolved with technology, enabling electronic trading, online platforms, and global networks, which have increased speed and accessibility but also complexity and interdependence. Understanding market dynamics involves economics concepts such as supply and demand, elasticity, volatility, and risk management.