How do you define a market?
We go to the nearby market every day to purchase our grocery, clothes, shoes, etc. Technological advancements have not only converted the world ‘into a boat with different rooms’ (Kishore Mehboobani, Dean of Lee Kuan Yew School of Public Policy, Singapore) but also changed our concept of a market.
Managerial economics’ teachers of recent decades don’t agree with classic definitions of the market. The layman’s definition, ‘a place which facilitates an organized exchange between buyers and sellers of a good or services’ may be helpful to understand the basic concept of a market but no more acceptable to many economists.
Then how to define a market?
If you look at Oxford Advanced American Dictionary, you will find various definitions of a market like:
“An occasion when people buy and sell goods; the open area or building where they meet to do this.”
“A store that sells food or one kind of goods.”
“A particular area, country, or section of the population that might buy goods.”
“Business or trade, or the amount of trade in a particular type of goods.”
First three definitions seem to refer to an occasion, place or region while the last one confuses the previous states by omitting the place.
Economists have differing definitions of markets, depending upon their geographical boundaries or technological timelines.
Antoine Augustin Cournot (28 August 1801 – 31 March 1877), a French philosopher and mathematician published “Researches on the Mathematical Principles of the Theory of Wealth in 1838. He defines a market as:
“Economists understand by the term market not any particular marketplace, in which things are bought and sold, but the whole of any region in which buyers and sellers are in such free intercourse with each other that price of the same good tends to equality easily and quickly.”
Sir Sydney John Chapman (20 April 1871–29 August 1951), an English economist and civil servant, having publications like The Lancashire Cotton Industry (1904), The Cotton Industry and Trade (1905), Outlines of Political Economy (1911), and the three-volume Work and Wages (1904–1914) defines a market as:
“The term market refers not necessarily to a place but always to a commodity and the buyers and seller who are in direct competition with one another.”
Frederic Charles Courtenay Benham (1900-1962), author of Lectures on the Principles of Money, Banking, and Foreign Exchange … (1925), defines a market as:
"Market is any area over which buyers and sellers are in close touch with one another, either directly or through dealers, that the price obtainable in one part of the market affects the prices paid in other parts".
J. C. Edwards defines a market as:
“A market is that mechanism by which buyers and sellers are brought together. It is not necessarily a fixed place.” Ely says:
To Ely, "Market means the general field within which the force determining the price of particular product operate".
Alfred William Stonier (Author), D.C. Hague authors of “Textbook of Economic Theory” defines a market as "any organization whereby buyers and sellers of a good are kept in close touch with each other."
A market is no more restricted to a place, area or a region. It can be local as well as global. You can buy a book from your local book shop or directly from www.amazon.com .
However, it still needs buyers and sellers to help making a transaction for a single commodity in a free competition environment. Website sources define a market as:
place where buyers and sellers come together to carry out dealings. For
Stock Exchange dealings this is no longer a physical floor but a
network of screens on which prices are quoted. Deals can be done either
by telephone or computer.