A Market can be defined as the total number of buyers and sellers in the region or area covered by the attention. The reason or area may include earth, states, country, or cities. Keep on reading to learn about types of markets.
The value of the items and the cost/price traded by people mainly depends on supply and demand in the markets.
The nature of different markets can be a physical body or might be virtual, it may also be a global market or local market, a perfect market, or an imperfect market.
As we have different types of markets and all the different markets are not the same and similar. We can divide the market types based on different natures and competition levels.
Different types of market structures will decide an economy. These kinds of market structures necessarily refer to the degree of competition in a market. Other components of market structures are the nature of products & services, the number of the seller, the number of consumers, and economic scale (types of market in economics).
Let us discuss different types of markets in detail. Other things to know that not all types of the market present but many of them just known, they help us understand the main purpose of market structure classification and competitive intelligence market research.
What are the Different Types of the Market
Perfect Competition or Pure Competition
When we talk about the pure or perfect competition market it means that there is a massive number of buyers and sellers competing with each other. When it comes to competition all the sellers in the market are smaller in competition with each other. In these types of markets, no big player influences the market.
So each and every firm in this market is a price taker. When we talk about the perfect competition market few things come to mind. This is one of the reasons it is a theoretical concept. The things can be as follow
- All the products in this market are completely identical
- Every firm and seller has only one motto of maximum profit.
- In this market, anyone can enter and exit at any time
- Here no one cares about customer perfection
- The best examples are the stock market, craft market, and agricultural
This type of market is more practical than what happens in the real world. It is similar to a pure competition market with a larger number of buyers and sellers competing against each other. When we talk about monopolistic competition a large number of buyers and sellers exist here. But they do not sell the same product.
Actually, all the product in this market type is a similar but slightly different type of products. This difference includes location, packaging, brand name, advertisement, etc.
Now here comes the point of customer perfection because buyers can go for one over the other product. But the seller can charge an extra amount for the product because they have market power. Now at some point, the seller becomes the price setter. For instance, we can take the example of toothpaste for Monopolistic Competition. There are more examples of monopolistic competition such as clothing stores, repair markets, beauty salons, tutoring companies, food restaurants, etc.
If you take an example of a beauty salon and spa then the services are quite similar but these service providers use value in addition to the service like better quality of service and reasonable pricing to attract more customers. Sometimes they promote beauty products or brand names they are associated with.
Entry and exit are quite easy compared to other types of market systems in monopolistic competition. The producer can enter the market when there is huge profit and exist at any time.
In this type of market, there are only a few numbers of firms or sellers but the customer is much larger than those firms. So here the seller has the market influence they set the price of the product in this case the customer becomes the price taker.
Also, the firm collaborates with each other to compete with others and use the market power to set the price. While the seller sets the price of the product they maximize their profit. In this kind of market, it is more difficult to enter because the new firm finds itself quite difficult to establish.
Also, established firms and companies have control over physical & financial resources, patents, and raw materials. Some of these things can be a barrier for new players to establish themself in the market.
There is only a limited number of firms and companies that dominate the market. If we can take an example of the video gaming market then there are 3 main paler namely Microsoft, Sony, and Nintendo that control the market.
In another example, we can say the cellular industry is an Oligopoly market, because there is a limited provider which is actually, a price setter, and consumers don’t have many options to choose from. We can say a few names cellular industry in India are Bharti Airtel, Jio, VI, BSNL, etc. Some more oligopoly market includes the automobile and gasoline industries.
Everything (Pricing, profits, and production levels) depends on the dynamic relationship between buyers and sellers.
Monopoly or Pure Monopoly
When we talk about monopoly competition there is only one seller/firm, so the single seller controls the whole market and sets the price according to their need because it has the power of the market. In this case, buyers do not have any other choice so they have to pay the price set by the seller.
So, in this competitive market customers do not have power and the market forces become irrelevant. Actually, this type of market is rare in the real world. There is no option to enter this type of market as the entry is totally blocked by the pure monopoly.
Public entities or government ventures are considered natural monopolies because for new players it is difficult to start up and compete with these entities. There might be legal barriers too. In this market, a firm has certain cost advantages as new players required lots of capital to compete with. This can be an expensive game for a new firm in a short time.
Some professional sports companies control player contracts and may have leases in certain cities, and areas. So, if anyone wants to enter this arena they need a huge capital to control these top talents. Extending the contracts or leases costs a huge amount of money for these professional sports companies.
In another example, we can take Google which is a leader in the search market types, and Facebook which plays a vital role in the social media space.
Compared to other competitive markets this type of market does not have a large number of buyers and sellers. Here is the only buyer of particular products and services. So, the customer has all the power to set the price of those particular products and services. Here consumer becomes the price setter and the firm becomes the price taker.
Two Main Types of Market
There are two major types of markets namely economic markets and physical markets.
- Economic Markets: some of the famous types of markets in economics included in these areas – Financial Market, Media market, Foreign exchange market, Stock market, Real estate marketing (types of marketing for real estate business), agriculture marketing (different types of marketing for agriculture ), Niche market, Energy market, etc.
- Physical Markets: Examples of this kind of market can include – Bazaar, Fish market, Grocery market, Market town, Street market, Supermarket, Public market, Farmer’s market, etc.
Different Nature and Types of Market
- Available Market: It is a kind of market where all the people in that area can easily get the goods within the available market. Mostly daily use products and services are sold in this type of market because transportation can be costly for these products.
- Market Minimum: This type of market is small in size where people can buy goods or products without much marketing effort (types of marketing efforts). In this type of market, the lowest sales company can get without taking any action. Today this type of market is getting even lower.
- Market Potential: It is the type of maximum market size where people can buy goods or products that is subject to great marketing (types of marketing options) action can a company take. The upper limit for sales and marketplace within the market potential.
Types of Market-Based on Geo Location
- Local Market: This type of market is located in a small area like a small town or in a village. People can buy and sell their daily needs goods here. Transportation of this type of product can be costly.
- Regional Markets: This kind of market type covers a wide range of areas which can be districts and cities, and It is a bigger market than compared to the local market.
- National Markets: This types of market cover the whole country and allow to transport of goods anywhere in the county as per requirement and prevents the goods to be transported outside the boundaries of the country.
- International Market: when it comes to the international market goods and services can be traded internationally and transported outside of the country. Here the demand can be in bulk so that it can be transported.
Different Types of Market-based on Time
- Very Short Period Market: Here the price of the product depends on the demand. If demand is high the price will be high and if the demand is low price will be less. i.e. Vegetable market and flower market.
- Short Period Market: This is for a longer period than the very short period market, where demand can be adjusted and the price can also be modified.
- Long Period Market: This type of market product supply can be changed based on the market So, so it depends on the market demand and changes the production as per need. The price of the product can be different in different time periods because the price is set according to demand and supply.
Market-Based on Types of Transaction
- Spot Market: It is also called the cash market because here the product charges are being paid in cash at the time of product delivery. So, here the credit system is not available.
- Future Market: This is the type of market where the credit system works. So, people are being promised to be paid in the future. It is called the future market.
Some of the Famous Markets in Details
Foreign Exchange Market:
It is a global market that trades the currency value in a different mode. where things like buying, selling, and exchanging different currencies at the current valuation or price. this enables people to exchange their money with ease of exchange facility.
It is also known as the share market or equity market. It is the type of market where people buy and sell the share and stock which let them claim business as a shareholder. Stock markets may include securities funds and some private funds too. The Stock exchange market lists shares of common equity and other securities too.
Financial markets are the market types of the market where people trade financial securities as well as commodities, and at low values or prices which depend on the supply and demand chain. This types of market include physical location and an electronics system as well. The term financial markets are often used to refer to raises in finance.
The media market is also known as the newscast market, media field, labeled market area, and TV marketing area. Here people are being offered similar television or radio station. It also includes different types of offers like newspapers and online content.
It generally covers the services used to transport or move agricultural products from farm to consumer. It is also a well-organized system to manage harvesting, grading, packing, storage, transport, food processing, distribution, and sale.
Different Types of Markets – FAQs
Q1. What are the two types of markets?
There are two main types of markets namely physical markets and Non-Physical Markets/Virtual markets.
Q2. What are the types of markets in economics?
Here are the different types of markets in economics – financial market, media market, foreign exchange market, stock market, Real estate marketing, agriculture marketing, Niche market, Energy market, etc.
Q3. What are the different types of markets?
Here are 6 major types of markets – perfect competition, monopoly, monopolistic competition, oligopoly, oligopsony, and monopsony.
Q4. What type of market is also known as a daily market?
The stock market or stock exchange is known as the daily market.
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