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Classification of Markets:

1. Market - Meaning in Economics:1. Market - Meaning in Economics Market is commonly thought of as a place where

commodities are bought and sold and where buyers and sellers are meeting. In fact, anything

which has a price has a market. In economics to be called as a market, the idea of locality or

place is not necessary. There need be no physical entity corresponding to a market. It may for

example, consist of network of telecommunications across the world, say shares are traded".

Classification of Markets:Classification of Markets can be classified on the basis of (1) area covered, (2) time and

(3) degree of competition. According to the area, markets can be of three types (a) local (b)

national (c) International.

Local Market::

Local Market: When demand and supply of a commodity is restricted to a particularlocality, it is called a local market. For example, vegetables, milk, flowers, fish etc. For such

perishable goods, buyers and sellers are located only in particular locality where these goods are

usually available.

National Market:National Market: When demand and supply of a commodity are spread over the entire

nation, we have a national market. For example, wheat, sugar, medicines etc. Goods available in

the local markets may also have national market.

International Market:

International Market When a commodity enjoys demand and supply from the entireworld, it is said to have International market or world market. Gold silver, electronic goods are

the examples for goods having international market.

On the basis oftime:On the basis of 'time' On the basis of 'time' markets are classified into three types : 1.Very

Short Period : It is also called as market period. This is the time period in which supply remains

constant. The price paid in this time period is called market price or very short period price. 2.

Short Run: This is the time period in which supply can be altered to some extent by changing the

variable factors of production. 3. Long Run: This is the time period in which complete

adjustment in supply is possible. Supply of a commodity can be increased or decreased

according to the changes in demand. In long run, all factors become variable. For instance, ifdemand for cotton cloth increases in the long run, the capital equipment can be altered and the

equilibrium between the demand and supply can be achieved.

Based on competition:Based on competition: Based on competition, markets can be classified as perfect and

imperfect markets: 1.Perfect Competition Market: There is a perfect competition among the

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buyers and sellers. Prevalence of the same price for the same commodity at the same time is the

essential feature of this market. Buyers and sellers accept the price determined in the market.

Imperfect Competition Market:Imperfect Competition Market In this market, competition is imperfect amongst the

buyers and sellers. Different prices come to prevail for the same commodity at the same time.Imperfect market can take several forms. 1) Monopoly. 2) Duopoly. 3) Oligopoly. 4)

Monopolistic Competition.

Monopoly:Monopoly It is a market in which a single firm or seller controls the entire supply of the

commodity which has no close substitutes. The price or output in a monopoly market is not

influenced by other goods.

Duopoly:Duopoly It is a market where there are only two sellers. A change in the price and output

by one seller affects the other. When a duopolist takes a decision, he takes into account thereaction of his rival.

Oligopoly:Oligopoly There is few sellers in this market dealing in differentiated products. As the

number is small, each firm can influence the price and output decisions of its rival firms.

Interdependence is one of the importance features of the market. Homogeneity of goods may or

may not exist

Monopolistic Competition:Monopolistic Competition In this market, many firms produce differentiated products.

The commodities produced are close substitutes of one another. Thus in monopolistic

competition the goods are produced with slight differences. The commodities produced are close

substitutes of one another.