There are so many buyers and sellers on the earth but all the sellers and buyers are classified on their nature of selling and nature of some elements.
Markets have been classified into several categories on the basis of the elements found in their existence.
Classifications of Market in Economics
They are discussed below:
- On the Basis of Area or Region.
- On the Basis of the Time Element.
- On the Basis of Competition.
- On the Basis of Functions.
- On the Basis of Nature of Commodity.
- On the Basis of Legality.
1. On the Basis of Geographical Area or Region
On the basis of area or region a market can be classified into the following categories:
1. Local Market
When buyers and sellers of certain commodities are limited to an area or region then the market is called the local market.
Heavyweight goods and perishable goods have the local market because their demand is concerned with a particular area or region.
For bricks, stones, milk, vegetables, etc.
2. Regional Market
If the buyers and sellers of a commodity are concentrated in a certain region or state, The market is called the regional market.
The area is wide than the local market. The market for the Mexico market is in Mexico.
3. National Market
When the demand for some goods is limited to the boundary of the country the market is called the national market.
Gandhi cap and Nehru jacket are examples of such markets.
4. International Market
When the demand for goods crosses the boundary of a country, the market is called the international market.
Gold, silver, food-grains, and medicines are bought and sold throughout the world.
Hence, their market is the international market.
2. On the Basis of Time
On the basis of the time management the market can be classified into the following categories:
1. Very Short Period Market
The supply of goods in this market is limited to their stock only. We cannot increase their supply.
The demand determines the price of such commodities.
2. Short Period Market
During this period production can be increased to the productive capacity and produces cannot adjust the supply according to the demand.
Demand plays an important role in price determination.
3. Long-Period Market
It is a market wherein the supply can be adjusted to the quantity demanded.
All the factors of production are variable and even the scale of production can be changed.
Supply plays an important role in price determination.
The price in this market is called ‘long-run price’ or ‘normal price’.
4. Very Long Period Market
Under this market both demand and supply can be changed.
Demand increases due to an increase in population, change in tastes, habits, and fashions while supply can be increased by increasing the variable inputs and even the scale of production can be changed.
There is price determination by the economic forces of demand and supply and the permanent equilibrium is attained.
Thus, the market price is called ‘very long-run price.’
3. On the Basis of Competition
On the basis of competition prevailing in the market the following classification is done:
1. Perfect market
The market where there is a competition between sellers and buyers and within sellers and within buyers the market is called perfect market or ‘Perfect Competition Market’.
2. Monopolistic Competition
Oligopoly is one of the kinds of Imperfect competition.
Such market structure is found when the number of sellers is few.
Oligopoly is a market situation in which the number of sellers dealing in a homogeneous or differentiated product in small.
A market wherein there are two sellers or producers of a product is called do a Duopoly.
They have a complete hold over the supply of that product.
A product of both the sellers is Homogeneous and the prices are also the same.
A pure monopolist should be taken who has full control of the supply of a particular product.
4. On the Basis of Functions
On the basis of functions, markets can be classified into following categories:
1. Mixed or General Market
A market where all types of goods are bought and sold is called a mixed or general market.
Markets in cities are found in this category.
2. Specialized Market
A Market where a particular commodity is sold is called up a specialized market.
Vegetable markets, foods market, Cloth Market are examples of such marketing.
3. Marketing by Samples
When the goods are bought and sold on the basis of samples.
The market is called Marketing by samples.
Oilseeds, food grains and raw cotton are bought and sold on the basis of samples.
4. Marketing by Grades
When the goods are graded and then different buyers and sellers deal in such goods on the basis of their grades, then the market is called Marketing by grades.
Agricultural Products are graded and then they are sold accordingly.
Dalda, bath soap, edible oil, etc. Are sold on the basis of grading.
5. On the basis of Nature of Commodity
The market is also classified on the basis of nature of commodity is given below:
1. Product Market
A market where a particular product is bought and sold is called a product market.
For example, agricultural products are sold in agricultural markets is a market of this type.
2. Stock Market
A market where is stock and shares, bonds, securities, debentures, etc. are bought and sold is called the stock market.
Bulls and bears are engaged in finalizing the transactions as per the market rates.
3. Bullion Market
A market where silver and gold are bought and sold is called the Bullion market.
In this market metallic trading takes place.
6. On the Basis of Legality
On the basis of legality, markets can be put into two categories are given below:
1. Legal Market
A market where legal transactions of goods and services take place between buyers and sellers.
It is recognized by the government. It is also called a fair market.
2. Illegal Market
A market where high prices are charged what has been fixed by the government and it happens when the goods are in short supply.
Businessmen and traders earn profits by indulging in black marketing, smuggling, and hoarding.
The Hong Kong market is an illegal market.
Thus, now you know the classifications of the market in economics.