Signs and functions of the market. Signs of a market economy What is it, a market of goods and services

Concept of market and market economy

The modern economy of most developed countries has a market character, so the market can be considered the most important part of the market system.

Definition 1

The market is an essential component of a commodity economy, without which commodity production cannot exist.

The real need for the market is due to the same reasons as commodity production:

1. Economic division of subjects of market relations,
2. Development of the social division of labor.

These conditions have matured and developed as an integral process of interaction between the production and sale of goods.

Market competition contributes to the creation of a solid basis for commodity production, being the most important element of this mechanism. In the process of development of commodity production, a market was inevitably formed, the concept of which is multidimensional and difficult to characterize unambiguously. In a simplified version, the market can be represented as a specific place of trade (exchange) of goods.

In a generalized concept, the market is considered a system of economic relations that are based on the constant exchange of consumers and producers of products (services), occurring on a voluntary basis in the form of an equivalent exchange of a product (good) for money or goods for a good (barter).

Signs of the market

The concept of "market" is most often associated with the market economy as a whole, becoming an abbreviation for the very concept of "market economy". In a large number of states, the market can manifest itself in a specific way, which depends on the methods of regulating market relations, as well as national traditions.

Despite the fact that the market is a system that allows the producer and buyer to make free purchase and sale of goods, it must be divided into groups in accordance with certain characteristics (see figure).

We can say that the main feature of a modern market economy is the presence of a wide variety of markets. All types of markets are interconnected, influencing each other and not existing separately. An imbalance in a certain market can immediately affect all others, including the economy of the state as a whole.

Fundamentals of a market economy

A progressive market economy is characterized by the recognition of a system of certain financial, social and political foundations, without which its existence will be impossible.

The basis of a market economy is the economic self-determination of the individual, which is a feature of a person’s individual freedom and a way to identify his potential. It means the right to independently improve your own life, ways to earn a living.

Only the implementation of the principle of financial self-determination can, to a large extent, guarantee and create equal chances for market activity for all participants in a market economy.

Property as a sign of a market economy

Note 1

The main feature of a market economy is the right to ownership of movable and immovable property, including land. The existence of a large number of owners is a necessary condition for social stability in society.

Private property in a market economy is characterized by property responsibility for the results of its use, while the market evaluates types of management in accordance with their economic, real and social efficiency, implying as a mandatory element the economic inequality of different forms of ownership.

Also, a market economy is characterized by economic freedom of commodity producers. This principle is based on the right to make independent decisions in the sphere of determining the structure and volume of one’s own production, the range of goods and services, the volume of their sales, setting prices and choosing partners.

Signs of a market system

Another feature of a market economy can be called free pricing, in which the administrative assignment of prices is allowed only in non-market areas (for example, in science, healthcare, education, etc.).

The simultaneous impact on the cost of a large number of pricing factors gives prices unpredictability, forcing manufacturers to repeatedly improve the organization of production, minimize losses and increase quality.

The impetus for a market economy comes from the presence and movement of labor, product and capital markets. Of particular note is the labor market, which guarantees better employment and endless retraining of the public workforce.

A market economy is also characterized by government regulation, which manifests itself in several directions:

• Implementation of tax and investment policies (stabilization of production);
• Policy of scientific and targeted programs, implementation of financing of technological progress;
• Carrying out investment policy, subsidizing socially important industries;
• Regional and financial policies pursued by equalizing the levels of financial development of certain areas;
• Carrying out demonopolization, that is, state support for competition;
• Anti-inflationary and economic policy, including the improvement of the monetary system;
• Overcoming excessive property differentiation of the population through a profit policy.

The state provides social protection, which is a smoothing out of the negative social consequences of market production.

Protection of the social sector includes 3 factors, including the guarantee of receiving wages; regulation of business profit through its tax redistribution; protecting the standard of living of society through indexation of wages and other fixed incomes.

Note 2

Thus, the modern market economy is a system that is based on clear principles. The market system is always in motion, it is dominated by the most important factors that affect the economic life of the country, which gives the market system unpredictability.

The main operating goals in the market are supply and demand; their interaction determines what and in what quantity to produce and at what price to sell.

Prices are the most important instrument of the market since they provide its participants with the necessary information, on the basis of which a decision is made to increase or decrease the production of a particular product. In accordance with this information, the flow of capital and labor flows from one industry to another.

Free (competitive) market is a self-regulating system that achieves results and maintains its balance spontaneously, without the intervention of external forces.

• Unlimited number of competitors.
• Sign, free access and exit from the market.
• Absolute mobility of all resources.
• Availability of complete information (through prices).
• Absolute product homogeneity.
• No one competitor can influence the decisions of others.

• It is a regulator of the economy.

• It is a means of ensuring national economic relations.
• Is a tool of information (through prices)
• Provides optimization of the national economy.
• Provides rehabilitation of the national economy.

Market conditions

The economic situation of producers and consumers, sellers and buyers depends on market conditions, which change under the influence of numerous factors.

— this is a set of economic conditions developing on the market at any given time under which the process of selling goods and services is carried out.

Market infrastructure

Market infrastructure is a set of institutions, systems, services, enterprises that mediate the movement of goods and services, serving the market and ensuring its normal functioning.

• exchanges
  • trading
  • currency;
• auctions, fairs;
• wholesale and retail trade enterprises;
• , insurance companies, funds;
• labor exchanges;
• information centers;
• legal offices;
• advertising agencies;
• auditing and consulting firms, etc.

All these elements are very closely related to each other. If they are in equilibrium, then the entire economy is also in . Conversely, the destabilization of at least one of the elements has a negative impact on the entire market economy as a whole.

Market structure

Market structure- this is the internal structure, location, order of individual elements of the market.

• Market structure by objects of market relations
  • market of consumer goods and services
  • raw materials market
• Market structure by market subjects
  • buyers' market
  • sellers' market
• Market structure by geographic location
  • local
  • National
  • world
• Market structure by degree of competition restriction
• Market structure by industry
  • automotive
  • oil
• Market structure by sales nature
  • wholesale
  • retail
• Market structure in accordance with current legislation
  • legal
  • illegal
  • "black market

Market functions

Information function

• number of products produced
• range
• quality

Intermediary function

The market allows economic agents to exchange the results of their economic activities. The market makes it possible to determine how effective and mutually beneficial a particular system of relations between specific participants in social production is.

Pricing function

The market establishes value equivalents for the exchange of products. At the same time, the market compares individual labor costs for the production of goods with a social standard, that is, it compares costs and results, reveals the value of the product by determining not only the amount of labor expended, but also the amount of benefit that the product brings to society.

Regulatory function

A balance arises between producer and consumer, between seller and buyer.

Stimulating function

The market encourages manufacturers to create new products, necessary goods at the lowest cost and obtain sufficient profits; stimulates scientific and technological progress and, on its basis, increases the efficiency of the entire economy.

Enterprises that fail to solve the problems of improvement go bankrupt and die because of, making room for more efficient ones. As a result, the level of sustainability of the entire economy is gradually increasing.

Advantages and disadvantages of the market mechanism

Advantages of the market mechanism

• Efficient resource allocation, mitigation.
• The ability to operate successfully with very limited information (sometimes information about price levels and costs is considered sufficient).
• Flexibility, high adaptability to changing conditions, quick adjustment of disequilibrium.
• Optimal use of achievements (in an effort to obtain maximum profit, entrepreneurs take risks, developing new products, introducing the latest technologies into production).
• Regulation and coordination of people's activities without coercion, that is, freedom of choice and action of economic entities.
• The ability to meet the diverse needs of people, improve the quality of goods and services.

Disadvantages of the market mechanism

• Does not contribute to the conservation of non-renewable resources.
• It does not have an economic mechanism for environmental protection (legislative acts are required).
• Does not create incentives for the production of goods and services for collective use (education, health care, defense).
• It does not provide, does not guarantee the right to work and income, does not redistribute income in favor of the unsecured.
• does not provide fundamental research in science.
• Does not ensure stable economic development (cyclical booms, etc.)

All this predetermines the need for government intervention, which would complement the market mechanism, but would not lead to its deformation.

Markets in the national economy

National markets: concept, types, principles of organization

Nationwide market is an economic structure that ensures effective interaction between consumers and producers.

• the exchange procedure is based on basic economic laws;
• the process of interaction between consumers and producers is expressed in supply and demand;
• is a means of effective interaction between consumers and producers.

For the normal functioning of the market, the process of movement of goods is regulated by regulations, which creates its legal field.

The structure of the national market includes the following markets:

• , which includes the process of circulation of resources necessary for the production of goods. The goods here are production resources, and their pricing occurs as a result of the interaction of supply and demand;
• , which includes the circulation of a specific commodity - capital, the price of which is determined by the interest on the use of money;
• . It is based on free relationships between employee and employer, and labor becomes the subject of purchase and sale. Its price is set as a result of the interaction of supply and demand for it. Supply is the supply of people who are willing to work. And demand is the need for employees of a certain qualification and profession;
• Market of consumer goods, which is a process of interaction between producer and consumer regarding a good - the result of economic activity.

They represent the four main elements of the national market - economic resources, capital, labor and consumption, the functional interaction of which determines the specifics of the national market.

The object of the market is the good - goods and services that are included in the subject of circulation on the market.

The essence of the national market is associated with its specific qualitative and quantitative characteristics.

The main quantitative characteristics of the market are:

• number of manufacturers on the market;
• number of consumers in the market;
• distribution of positions between manufacturers;
• the degree of market concentration, i.e. the volume of transactions carried out on it for the purchase and sale of goods.

The main qualitative characteristics of the market are:

• the possibility of new manufacturers entering the market;
• the number of barriers to entry of new manufacturers into the market;
• level of competition in the market;
• degree of exposure to external factors;
• the presence and degree of interaction with other markets, such as international ones.

The interaction of a set of qualitative and quantitative characteristics determines the type of market.

Depending on specific conditions, each of the national markets can exist as:

Polypoly - This is a perfectly competitive market. A large number of producers and consumers of one type of good allows you to quickly respond to price changes.

For the functioning of this type of market, a prerequisite is freedom of behavior of all producers and consumers who have all the information about the state of the market. It is not subject to external regulation and operates freely, based only on the interaction of a large number of independent producers and consumers. The existence of such a market is impossible in practice, since there cannot be absolutely free producers and consumers on the market, and information is almost never available to everyone;

is a market in which there is only one producer of a certain good and many consumers. A manufacturer holding a monopoly position in the market offers a unique good that cannot be replaced by another, and sets the price for it independently;

Monopolistic competition - This is a market in which several large producers of a homogeneous good operate. This good is essentially homogeneous, but each monopolist presents it with distinctive, unique features - a product segment. Each monopolist has the necessary economic power to independently set the pricing policy for the good it produces, but it is limited to the extent that the consumer will be forced to switch to using a substitute product. Under these conditions, the monopolist’s activities are aimed at enhancing the degree of individuality of the good he offers (for example, with the help of a certain trademark, brand, sign);

is a market in which several producers of a good of homogeneous composition agree to develop a unified pricing policy and supply volumes. There is a tendency towards stable pricing policy, and entry into it for new producers is either difficult or impossible.

The structure of the national market is heterogeneous; it includes a large number of smaller markets. They usually specialize in the circulation of a certain economic resource or benefit. The interaction of these markets of the national economy is the essence of the national market, determines its dynamics and pace of development.

Market failures

Market failures include:

• natural monopolies- one firm satisfies all the demand for products, since the more it produces, the lower its average costs. Natural monopolies include railways, the country's energy system, the metro, etc. Increased competition, i.e. the emergence of other manufacturing firms reduces the efficiency of using limited resources, since new firms would have to build parallel communications in the course of competition;
• information asymmetry manifests itself in the fact that one economic agent has more information about an object or phenomenon than his partner. In this case, he finds himself in a more advantageous position and can extract excess profits from it. Information asymmetry is especially pronounced in industries such as education and healthcare, since a person is not able to assess in advance the qualifications of a teacher or doctor. In a free market (without government intervention), such a situation would lead to a deterioration in the quality of education and health services, and, therefore, would reduce the welfare of society;
• - a situation when the actions of an economic agent affect third parties not related to this economic agent. An example of a negative external effect would be environmental pollution from a manufacturing plant, loud music from neighbors, etc. At the same time, there are also positive external effects, for example, the location of an apiary next to an orchard (bees pollinate flowers, increasing the yield and amount of honey). Since in a free market the producer has no interest in the externalities he creates, and in most cases they are harmful, the government must take control of them;
• - benefits that are enjoyed by all members of society without exception, and their volume and quality do not depend on the number of consumers. Such goods include national defense, a body of laws, law and order, a health care system, etc. The market is not able to produce such goods because it cannot provide payment for these goods (since no one can be excluded from using this good). The state, by collecting, is able to provide financing for public goods.

The modern economy is a constant movement of mass goods, money and income moving towards each other. Goods are produced and delivered to the most remote points, where people are able to oppose them either with other goods or with monetary income received from the sale of their goods. These flows move towards each other for the purpose of mutual exchange. If their quantitative and qualitative parameters coincide and correspond to the needs of people, their exchange will take place. Some participants in the exchange process will receive the goods they need, while others will receive the monetary equivalent of these goods.

The following conditions for the emergence of a market can be distinguished: 1) division of labor, which leads to specialization and exchange; 2) independence of economic agents, or, as economists often say, isolation of economic entities; 3) freedom of enterprise.

The market as an economic system is contrasted, on the one hand, with a natural economy (traditional economy), and on the other hand, with a planned economy (command economy).

The main features of a market economy are:

• · economic freedom of participants in the production process (each of them makes economic decisions independently, without anyone’s orders);
• · competition (competition) of many sellers and buyers;
• · maximization of private benefit as the goal of economic activity of all participants in the economic system;
• · regulation of production, exchange and consumption through the mechanism of market prices.

Economic theory explains the division of labor between commodity producers and their specialization by rationalism in the economic behavior of people. If different workers do not produce absolutely all the consumer goods they need (as in a completely subsistence economy), but specialize in the production of only some of them, then their overall productivity will increase noticeably. Therefore, instead of producing everything themselves, people begin to specialize in the production of a few products, exchanging their surplus for other products that they are less able to produce. As a result, everyone wins. But in order for everyone to have a complete set of all necessary goods, it is necessary to organize a constant exchange of various goods between them.

The market is often considered a self-regulating economic system that best, without conscious regulation, satisfies the needs of society. Pursuing his own benefit, a person, with the “invisible hand of the market,” in the figurative expression of the founder of economics, Adam Smith, satisfies the needs of other members of society: “I have not heard that those people are very successful who exchange the products of their labor only for the sake of public benefit” Quote. Based on: Economic theory: textbook for universities / ed. V. D. Kamaeva. - M.: Vlados, 2007. - P. 47 / Smiht Adam. The Wealth of Nations. New York. Modern Library, Inc. P. 423.

Originally, A. Smith’s work “An Inquiry into the Nature and Causes of the Wealth of Nations” was published in 1776. In the text of the Russian translation, many chapters are translated with abbreviations and the exact translation of the principle of the “invisible hand” in the market process is not fully presented. That is, in pursuit of their own economic interests, people often serve the interests of society more effectively than when they consciously strive to serve them.

The objects of the market are goods and money. The main category of the market economy is a commodity - a product of labor produced not for one’s own consumption, but for exchange for other goods, for sale. Commodities include not only material goods ready for final consumption, but also factors of production (land, labor, capital) and intangible goods (services). For the convenience of commodity exchange, in developed market relations, money is used, which is the equivalent of any goods.

Signs of a perfectly competitive market:

1) Many buyers and sellers.
2) Free entry to the market for producers and free flow of capital from and to the industry.
3) The products produced are homogeneous (homogeneous is a product that can be measured in kilograms, tons, liters, cubic meters).
4) Free prices formed under the influence of supply and demand.

An ideal market is a competitive, perfect and free market that has:

Unlimited number of market participants;
free entry and exit into the market;
free prices;
a significant number of sellers and buyers;
lack of pressure and coercion on the part of the participants in relation to each other;
homogeneity of products of the same name presented on the market.

The ideal market model is perfect competition

Perfect competition is a type of market in which many sellers offer buyers the same product, have free entry into the industry, and use common price information.

There must be a significant number of sellers and buyers of these products on the market, who, under this condition, alone will not be able to influence the market equilibrium. None of them will have the corresponding power. All subjects are fully subject to the market element.

Standard and identical products are sold. An example of such a product would be flour of one class, grains, sugar, etc. If these conditions are met, buyers will not give preference to products from a particular company, since the quality will be the same everywhere.

In an ideal market model, one seller cannot influence the market price, because there is a fairly large number of firms that produce the same product. Under perfect competition, each seller will be forced to accept the price dictated by the market.

In an ideal market there is no competition, since the quality of the product is absolutely uniform.

Consumers have access to price information. If any manufacturer decides to single-handedly increase the cost of its products, then it will simply lose its customers.

Sellers do not have the opportunity to come to an agreement and raise the price, because there are quite a lot of them in this market. The ideal market model assumes that absolutely every seller has the opportunity at any time to both enter and exit a certain market sector, since there are no barriers. A new company is created and closed without any problems.

Perfect competition is a model of an ideal market, in which individual sellers cannot influence the market price by changing production volume, because against the general background of the market their share participation is almost zero. If the seller decides to reduce its production and sales volumes, this will change the overall market supply negligibly.

The seller is forced to sell his products at the already established price, which is the same for the entire market. Demand for his product changes quite elastically: if the seller sets the price for the product above the market price, then demand will drop to zero. If the price is set below the market price, then demand will grow indefinitely.

Perfect competition is an ideal market model that is based on a theory that does not exist in real life. Products vary from manufacturer to manufacturer, and barriers to entry and exit from the industry clearly exist. Perfect competition is approximately represented in some agricultural markets among small market sellers, retail stalls, as well as construction crews, photo studios, etc. They are all united by the approximate similarity of the offer, a large number of competitors, the negligibly small scale of the business, the need to work at the prevailing cost - i.e. Many of the above conditions for a perfect market exist. Using their example, one can study the organization, functioning and logic of small firms using a simplified and generalized analysis. In Russia, very often there are situations in small businesses that are close to perfect competition.

The concept of an ideal (perfect) capital market

Quite often, finance theories are based on the concept of the so-called ideal or perfect capital market.

An ideal market is one in which there are no difficulties, so that the exchange of money and securities can be carried out easily and without any costs.

An ideal market has the following characteristics:

There are no transaction costs (related to finding a partner, concluding a deal);
no taxes;
the presence of a large number of sellers and buyers, none of whom influence the prices traded on the securities market;
equal access to the market for individuals and legal entities;
absence of information costs (equal access to information);
all active market participants have the same expectations;
absence of costs associated with financial difficulties.

As a rule, in practice, most of the listed conditions are not met: there are brokerage costs and taxes, often individuals do not have the same access to the market that corporations have, quite often managers are better informed about the prospects of their companies than outside investors, etc. .d.

", strictly speaking, only applies to a fully competitive market, but also explains the situation in others. In addition, a purely competitive market is the standard against which all other types of markets can be compared. Such a market can be called “perpetuum mobile”, that is, an economic perpetual motion machine, where the economic efficiency (efficiency) is 100%.

The global one defines several features that characterize the free market regime in the system.

1. Unlimited number of competitors, absolutely free access to the market, as well as exit from it. This means that every person has the right to engage in business activities or to suppress such activities. A person can do this in different ways: open his own business, take direct part in labor, hire producers, purchase shares, government bonds, put money in a bank, invest it in real estate (land, house) and others.

Let us note that a free (fully competitive) market corresponds to any form of ownership except state ownership, and the public is free to choose whichever one they want. Free competition excludes all forms of discrimination against producers and consumers. Any owner of monetary income who is going to translate his need into demand has the right to buy exactly those goods and services and exactly in the volumes that he needs.

2. The second sign is the absolute mobility of material, labor, financial and other resources. After all, a competitor invests his money, say, in shares, for a reason, in order to increase income. He can only count on this if he is there; Where his capital moved, there was an expansion of production and sales. This happens when additional resources are attracted, more effective combinations of resources are used, previously mothballed production capacities are used, and effective technologies are mastered.

3. The third sign is that each participant in the competition has a full amount of market information (about demand, supply, prices, profit margins, interest rates, etc.). Without this, he will be unable to make the best choice for himself between, for example, buying a house and purchasing shares. In addition, in the latter case, the competitor needs to know which shares will bring him the maximum income.

4. The fourth feature is the absolute homogeneity of products of the same name, which is expressed, in particular, in the absence of trademarks and other individual characteristics of the quality of the product. The presence of one or another trademark puts the seller in a privileged, monopoly position, and this is no longer a free market.

5. The next sign is that no participant in free competition can influence the economic decisions made by other participants in competition, since the number of participants in competition is too large (the first sign). The contribution of each manufacturer to the total production volume is insignificant, so the price is for. to whom he intends to sell his goods has almost no effect on the market price. So, real price levels depend little on the desires of individual economic entities and are established by the market mechanism.

6. The sixth sign is the absence of economic deformations (monopolies, inflation, forced unemployment, overproduction). The flexibility of the market mechanism does not allow the creation of conditions under which the above-mentioned economic deformations may occur. Now let’s try to imagine how the signs of a free market we have analyzed differ from what we know about the economic systems of modern developed countries, for example the USA, Japan or Western Europe. There is no doubt that a free market in the narrow sense of the word does not exist in any market in any of these countries. Moreover, it has never happened before, and it could not have happened.

In fact, it's hard to imagine:

1) so that in reality every entrepreneur has at his disposal absolutely complete information about the state of the entire economy;

2) so that resources move freely from one industry to another;

3) that there are no trademarks;

4) so ​​that only those who do not want to work are unemployed. So, the free market is an abstraction, an ideal image, the same as, say, a complete vacuum or a point that has no dimensions. At the same time, any really functioning market (it is called competitive or operational) has elements of a free one.

In a real market, both natural and unnatural monopolistic formations can operate, keeping prices high, preventing the free inter-industry movement of resources and limiting market access. In real markets, there are distortions of market processes under the influence of inflation, irresponsible actions of trade unions, erroneous economic policies, mistakes of entrepreneurs themselves due to incomplete commercial information or for other reasons.

Information about sources.