Every day people carry out many transactions, turning money into products. The resulting product is the result of exchange. A person acquires a good in as much quantity as he wishes for a certain fee, which is established on a contractual basis. This form of exchange is called a market.

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What is a market

This is a system of relationships connecting the supplier and consumer of these goods (services). The price is also formed there, which is monetary value product.

Types of markets operating in

Depending on the object of market relations, markets are:

  • resource (natural resources, labor, means of labor);
  • consumer (food, non-food products, consumer services);
  • financial (monetary relations, gold and foreign exchange reserves, insurance, contracts).

The classification by scale is as follows:

  • single, which are separate retail outlets;
  • local – a large number of individual outlets combined into one retail outlet;
  • regional – trading platforms that unite retail outlets of a certain locality;
  • national – unification of regional segments;
  • international – trading platforms of integrated entities;
  • world.

Classification depending on the volume of trade turnover:

  • wholesale;
  • retail;
  • state procurements.

According to the degree of freedom of the buyer and seller, they are distinguished:

  • monopoly (one manufacturing company);
  • monopolistic (one consumer);
  • oligopolistic (small number of manufacturing firms conducting their own collusion activities);
  • oligopolistic (a limited number of buyers conducting their activities on the basis of secret collusion);
  • model of perfect competition (an ideal type of competitive market where there are a large number of consumers and resellers, independent of each other).

Signs of the market

The main feature of a market economy is freedom of trade, that is:

  • the manufacturer himself decides how much of the product to produce;
  • the buyer determines for himself what quantity to consume;
  • the price is formed based on the laws of supply and demand.

Important! In his work “An Inquiry into the Nature and Causes of the Wealth of Nations,” Adam Smith introduces the concept of the “invisible hand.” In fact, the “hand” is a market mechanism that coordinates the decisions of producers and buyers. The seller, wanting to maximize his own profit, is forced to satisfy the preferences of buyers.

Market laws

Just like other mechanisms, market operates according to its own rules.

It is characterized by: the law of demand, the law, the law of equilibrium price, the law of competition.

Law of Demand

When the cost of a good increases without changing other conditions, the demand for the product falls.

In addition to price factors that influence buyer interest, there are also non-price factors, which include:

  • increase or decrease in income of the population;
  • increase or decrease in prices for other goods;
  • changes in population structure;
  • changing consumer preferences.

Law of supply

The higher the cost, the higher quantity of product offered subject to the fact that other conditions remain unchanged.

Non-price factors influencing the quantity of supply include:

  • increase or decrease in production costs;
  • the emergence of competitors producing substitutes;
  • natural disasters, changes in the political situation in the country, etc.

Law of equilibrium price

When a balance is reached between supply and demand, an equilibrium price is established that can satisfy both the consumer and the buyer.

Important! The laws of the market do not apply in a planned economy, and achieving an equilibrium price is impossible. When implementing the plan, the personal preferences of consumers are not taken into account, and a deficit or surplus of various goods appears.


Law of Competition

An increase in producers of the same product leads to a revision of costs, an increase in labor productivity, diversification of production, improvement in the quality of products, reduction in costs, acceleration of the pace of scientific and technical progress, an increase in GDP, and structural changes in the economy.

Taking into account all the above positive aspects of competition, the desire of society is explained achieve perfect competition and the desire of monopolists to prevent this process.

Briefly about the functions

The market mechanism is designed to answer three main questions: What to produce? How to produce? For whom to produce? To do this, a number of functions are performed, which are presented in the table.

Functions of the market in economics

Market system

This system itself represents a unified system of segments for various purposes.

It consists of the following components:

  • consumer goods, services;
  • labor force (receipt of work and permanent income by the population);
  • securities, currency (transactions on the stock exchange);
  • intellectual property, achievements of scientific and technological progress;
  • means of labor;
  • spiritual goods (books, newspapers, magazines, exhibitions, cinemas, tourist trips).

What is this, a market for goods and services?

Otherwise known as consumer, it is an organized structure, where demand from government and households and supply from small, medium and global businesses meet.

Its importance is great since it makes up a large part of the GNP. In addition, its functions include:

  • creation, as well as satisfaction of public goods;
  • ensuring the profitability of entrepreneurs.

Structurally it looks like this:

  • government procurement;
  • means of production;
  • consumer goods and services.

State procurements

Government orders to meet the needs of a municipal as well as state nature, for which funds are allocated funds from the state budget. Characterized by large volumes and strategic purpose.

Means of production

The subjects of this type of relationship are small and large industrial enterprises that sell, purchase, and exchange industrial objects.

Consumer goods and services

Public goods. For this type of goods, enter concept of elasticity, which allows you to assess the degree of need for a good.

Attention! The elasticity of a product shows the degree to which demand or supply changes depending on price. Let's take sugar as an example. Regardless of the price, it will be bought in the same volumes. We can say that this type of product is inelastic, because a change in price will not lead to a change in its consumption.

Manufacturers market

This is a type of relationship where industrial goods are offered. In the conditions of this trading platform, producers of goods are created in order to satisfy another manufacturer's need through sale, exchange, leasing of equipment.

The main differences of this variety:

  • fewer buyers who purchase in much larger volumes;
  • in the producer market, demand does not change much as a result of changes in cost;
  • geographic concentration of buyers;
  • characterized by the consumption of a large mass of manufactured products.

Single product trading platform

A miniature representation of the movement of goods and their sales. When determining such a trading platform, they talk about the places where the demand for this type of product is highest, about its main competitors, about the methods and methods of sales, about the share in the overall structure of product distribution.

Based on the laws of supply and demand, the quantity of goods and their value are formed.

However, despite all the positive aspects, there are also negative ones.

With the transition to market relations, such a concept as the “shadow economy” appears. Since tough competition automatically eliminates weak players, they begin to look for illegal ways to maximize their income.

The most prominent representatives of the shadow economy are homeworkers. Of course, there are homeworkers registered as legal entities who regularly pay taxes and openly provide data about their activities. However, a considerable part does not comply with these conditions. The shadow economy is bad because its activities are not included in the taxable one. Tax leakage from the budget is always leads to its deficiency.

What is the market and the market mechanism in economics

Market economy, signs and mechanisms

Conclusion

The market system of relationships is not ideal. However, based on its capabilities, it is in many ways better than a planned economy.

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.

Signs of a free market:
  • 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.
Functions of the free market:
  • 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.

Market infrastructure includes such elements as:
  • 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.

The following criteria can be distinguished for classifying market structure:
  • 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

The market provides objective information about changing economic conditions:
  • 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

While not ideal, the market mechanism nevertheless has a number of advantages unique to it:
  • 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 nationwide market has the following characteristic properties:
  • 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 state 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.

Moscow State University

INSTITUTE OF JURISPRUDENCE

Faculty: State and Municipal Administration

Speciality: Strategic Manager

Discipline: Economic theory

Well 3

Abstract.

"Market economy. Its economic essence"

Completed by student: Yurasova N. B.

Group: 666

Scientific supervisor: Chaikovskaya A.A.

Introduction

1. The concept of the market.

2. Market structure and its types. Market segmentation.

3.Market functions

4. Market economy

5. Pros of a market economy.

6. Disadvantages of a market economy.

7. Russia and the world market

Bibliography

Introduction No matter what stage of historical development human society is at, in order to live, people must have food, clothing, housing and other material goods. The means of subsistence necessary for man must be produced. Their production takes place during the production process. Production is the process of human influence on the substance of nature in order to create material goods and services necessary for the development of society. Historically, it has gone through a long development path from the manufacture of the simplest products to the production of the most complex technical systems, flexible reconfigurable complexes, and computers. In the production process, not only the method and type of production of goods and services changes, but the moral improvement of the person himself occurs. In any society, production ultimately serves to satisfy needs. Needs- this is the need for something necessary to maintain the life of an individual, social group or society as a whole. Needs act as an internal impulse for active production activity. They predetermine the direction of production development. Initially, in primitive society, almost all human life activity was reduced to the development of material production, without which it was impossible to maintain an extremely low level of consumption of material goods. At further stages of development of human society and production, intellectual needs appear, the volume and structure of consumption increases, and the standard of living of people increases. In the conditions of perfect, highly developed industrial production, humanity has the opportunity to satisfy to a large extent all existing types of needs: material, spiritual and social. Improving the life of the population is manifested primarily in more complete satisfaction of material needs for food, clothing and footwear, housing, working conditions and other vital goods. A specific feature of needs is their “irreversibility”: with varying degrees of intensity in any situation, they change, as a rule, in one direction - towards growth. Taken together, the needs are limitless. This means that material needs for goods and services, and diverse spiritual needs cannot be fully satisfied. But humanity strives for maximum satisfaction of needs, for which it must develop production using the limited available resources. In any system, production acts as the relationship of society to nature. For the normal development of the economy, it is necessary that production and consumption be in a certain dependence and a certain relationship to each other. Thus, in the process of life, economic, political, legal, technological, organizational, ethical and social relations develop between people. They reflect the systemic relationships of society. By organizing production and labor activities on the basis of the division of labor, specialization, cooperation and exchange, human society was able to make significant changes in its material and spiritual well-being and learn to produce thousands of times more products of labor than was possible in the days of subsistence farming.

1. Market concept.

The market is one of the most widespread categories in economic theory, one of the basic concepts of economic practice and economic theory. Often the concept of “market” is used as a well-known concept that does not require any explanation. In reality, there are very different interpretations of the market here and abroad.

Evolution of views on the market:

Initially, the market was considered as a bazaar, a place of retail trade, a market square. This is explained by the fact that the market appeared during the period of decomposition of primitive society, when exchange between communities was just becoming more or less regular, only taking the form of commodity exchange, which was carried out in a certain place and at a certain time. With the development of crafts and cities, trade and market relations expand, and certain places and market squares are assigned to markets. This understanding of the market has survived to this day as one of the meanings of the word. As the social division of labor deepens and commodity production develops, the concept of “market” acquires an increasingly complex interpretation, which is reflected in world economic literature. Thus, the French economist and mathematician O. Cournot believed that the term “market” should be understood not as any market area, but in general as any area where relations between buyers and sellers are free, prices are easily and quickly equalized. This definition of the market preserves its spatial characteristics, but it is not exhaustive.

With the further development of commodity exchange, the emergence of money, commodity-money relations, the possibility of a break in purchase and sale in time and space arises, and the characterization of the market only as a place of trade no longer reflects reality, because a new structure of social production is being formed - the sphere of circulation. As a result, a new interpretation of the market appears as an exchange organized according to the laws of commodity production and monetary circulation, as a form of commodity-money exchange.

If we consider the market from the side of the subjects of market relations, new definitions of the market arise as a set of buyers (F. Kotler in the book “Fundamentals of Marketing”) or any group of people entering into close business relationships and concluding large transactions regarding any product (Jevons A. Marshall in the book “Principles of Economic Theory”).

But this is just one side of the market; such definitions of the market are incomplete, since they do not cover the entire set of subjects of market relations (producers, consumers and intermediaries), and do not include relations of production, distribution, consumption in the sphere of circulation.

The market today is considered as a type of economic relations between business entities. There are two types of economic ties:

1) natural-material, gratuitous, in accordance with the volume and structure of needs;

2) commodity relations carried out through the market.

The characteristic features of the latter type of relationship are mutual agreements of the exchanging parties, free choice of partners, and the presence of competition. Commodity (market) connections are possible only on the basis of the free purchase and sale of goods and services. Direct hard funding, the use of cards and other restrictions (in the form of outbound trading, etc.) indicate a deformation of market relations.

From here we can give the following definition of the market. The market is a competitive form of communication between economic entities. Externally, on the surface, the market expresses the connection between sellers, intermediary traders and buyers. With a deeper understanding, taking into account the reproductive aspect, the market acts as a form of competitive relationship between production and consumption.

Another understanding of the market is closely related to this definition: the market is a social form of organization and functioning of the economy, which ensures the interaction of production and consumption without intermediary institutions regulating the activities of producers and consumers.

In the economic system as a whole, three independent economic subsystems interact: the state, the natural economy (when all produced products are consumed within the economy, for example, private farming) and the market. Depending on which subsystem has the greatest share, the entire economic system is characterized: if If the market predominates, then the system is market, and this is how a market economy arises; if the state predominates, then the system is administrative-command; if subsistence farming predominates, then so does the system as a whole.

2. Market structure and its types. Market segmentation

The market has a complex structure and its influence covers all spheres of the national economy.

The economic structure of the market is determined by:

♦ forms of ownership operating in the economy (state, private, collective, mixed);

♦ the structure of commodity producers (state, cooperative, rental, private enterprises, enterprises of individual labor activity), which depends on the share in the national economy of one or another form of functioning of economic entities;

♦ features of the sphere of commodity circulation;

♦ the level of privatization and denationalization of structural divisions of the national economy;

We should start with the fact that the commodity market, on the one hand, is a sphere of commodity exchange, and on the other, an economic activity, a system of organizational and economic actions that are aimed at promoting goods to consumers from the manufacturer.

Thus, the commodity market is a sphere of commodity exchange, characterized by the presence of relations in the form of purchase and sale of goods and the location of specific economic activities related to the sale of goods.

Basically, the commodity market is represented by three components: product supply, public demand and the price of the product.

The product supply is determined by the mass of goods that are intended for sale. Its main source is the production of goods throughout the country, import purchases and inventories.

Demand is characterized by the solvent need of the country's population. This element of the product market is determined by the needs of consumers and the amount they are able to pay.

The monetary expression of the value of a product is called the price of the product. Cost differs from price by several factors. Firstly, the value expression of money, which is influenced by the value of gold, through which the value of other goods is expressed, as well as the amount of money in circulation and not corresponding to the amount of gold it replaces. In addition, differences appear in the use value and quality of the product. Consumer properties determine the price relationship between individual goods, their types and varieties. In addition, the conditions for the sale of goods depend on changes in supply and demand, which affects market fluctuations in prices. In general, the commodity market classifies factors influencing price formation into factors of the first and second order (Fig. 1).

Main indicators of the functioning of the commodity market

The activity of any commodity market is determined by several basic indicators. These include:

  • The capacity of the commodity market, which represents the maximum possible volume of sales of goods under the conditions of a given level of solvency of demand, retail prices and product supply.
  • The dynamics of the development of the country's commodity markets in individual sectors, which are united into a single commodity market of the country.
  • The degree of diversification of the product market, which means the degree to which a given type of product covers the geographical, ethnic and solvent characteristics of the country’s population.
  • The quality of a product sold on the market. This parameter is determined by a set of product properties. In general, consumers place increased demands on products in terms of safety of consumption, packaging, compliance with environmental standards, labeling and after-sales service.
  • Competitiveness of goods on the market, i.e. the ability of a particular product to meet the requirements that have developed on the market in a specific period of time.

The product market can be classified according to several characteristics. One of them can be called a geographical feature (Fig. 2), by which commodity markets of individual regions are distinguished, which, as a rule, are represented by a subsystem of markets of individual countries or their groupings. The commodity aspect is not highlighted in this classification, since it is represented by aggregate markets consisting of individual commodity markets.


Based on product and industry characteristics, the product market is classified into markets for raw materials and semi-finished products, markets for finished products and markets for services. Each of the groups, in turn, is divided into other subclasses down to the level of the market for an individual product (Fig. 3).

For example, the commodity market for industrial raw materials consists of markets for steel, steel pipes, rolled products, platinum, nickel, diamonds, precious metals, medicines, etc. In the fuel market, as a rule, the market for oil and petroleum products is distinguished separately, since these goods are the subject of trading on oil commodity exchanges.

Petroleum products belong to the category of goods that economists call “joint”, in other words, any product from this category is obtained only as a result of the production of others.

Features of the commodity market for oil and petroleum products

Each product market depends on its participants who perform certain functions. Let's consider this using the example of the international oil market. Currently its participants include:

  • Oil companies that are engaged in the exploration, production, refining and marketing of crude oil and its products. In addition, some oil companies trade rights to crude oil and petroleum products through futures, options and commodity futures exchanges.
  • Oil refineries that act as buyers of crude oil and suppliers (sellers) of refined petroleum products to the commodity market.
  • Independent trading companies that work not only in the real market, but also in other types of markets.
  • Financial investment companies, trading houses and banks operating in new types of markets.
  • Private and collective investors who operate in new types of markets and seek to make money on successful investments in futures and options contracts for petroleum products and oil.

Prices on the oil market are currently determined by the operation of market pricing mechanisms. At the same time, the individual interests of consumers, independent producers and OPEC countries are dependent on the market and cannot influence the functioning of the market.

The oil industry still has an international character, and the bulk of oil is sold through long-term agreements. The price in this case is determined by the spot cash transaction mechanism and depends separately on each delivery.

In the process of work, companies have learned to minimize financial risks that arise due to price instability through the use of forward commodity transactions, which now occupy the predominant majority in the market. Profit is obtained by companies by using factors that have developed due to objective circumstances (the development of spot markets, the development of futures and forward trading, the rise in trade in oil and petroleum products).

It is worth noting that oil companies engaged in market trading cannot be called homogeneous in terms of their policies. The most successful businesses are taking advantage of new markets, while others are just getting started. There are also those who conservatively ignore new markets, refusing to participate in them. At the same time, all large companies place priority on oil exploration and production.

When studying the commodity market, special attention should be paid to determining the type of market structure and classifying its individual elements in terms of the conditions and nature of the transactions.

The structure of the market is a set of conditions that determine its operating features. The degree and nature of monopolization of the commodity market plays a significant role in the formation of its structure. The following main options are distinguished:

  • monopoly, characterized by one seller and an unlimited number of buyers;
  • monopson, in which there is an unlimited number of sellers per buyer;
  • oligopsony, defined by several buyers and an unlimited number of sellers;
  • polypopia and polypsony are characterized by approaching a state of unlimited competition.

Based on the actual concentration of product supply, which is the most important factor of monopolization, the product market is divided into the following types according to its structure:

  • monopolistic product market, when one supplier dominates;
  • oligopolistic product market, when a group of largest sellers dominates;
  • an atomistic commodity market, when there is a low concentration of product supply, which leads to intense competition.

This classification of the structure of commodity markets is somewhat abstract, since in any case there are many functional forms on the market that differ in the degree of monopolization and competition.

Market conditions can be more accurately differentiated based on differences in the relationships between sellers and buyers. Based on these relationships, it is possible to determine the peculiarities of monopolization and state regulation of a specific market element, method and form of sales of goods (Fig. 4). Thus, the commodity market can be divided into open and closed sectors.

The closed sector of the commodity market is that part of the commodity market where counterparties interact through relationships that are not purely commercial in nature. The closed commodity market is divided into the following segments:

  • intra-company supplies are characterized by trade turnover between branches, parent and subsidiaries of a large monopoly;
  • subsupplies to small and medium-sized independent enterprises that act as contractors to large monopolies within the framework of cooperation and specialization;
  • special trade in the form of supplies of goods under assistance programs and special intergovernmental agreements;
  • countertrade, which covers mutually dependent export transactions.

The open sector of the commodity market is a set of segments characterized by operations of a commercial nature. The open commodity market is represented by the following main segments:

  • short-term transactions that are concluded for a period of up to 1-1.5 years;
  • wholesale and retail trade;
  • operations on a free market where there are no restrictions on free competition.

The so-called “free” commodity market is in turn divided into the “spot” market, the “black market” and exchange trading.

It is worth noting that long-term commercial transactions occupy an intermediate position between the open and closed sectors of the commodity market. They represent a form of commodity exchange, which is characterized by stable commodity relations (from 2 to 25 years) and is determined by the forms of preferential economic agreements, i.e. trade is conducted on the basis of long-term commercial contracts.


We live in an age of the primacy of a market economy - almost the entire progressive world has already switched to it, and other countries are striving for this. The market itself is essentially nothing, but, according to many learned economists and even biologists, it is one of the main engines of progress, since for the purpose of profit a person is capable of much, including the invention of new technologies and the modernization of existing ones. All this leads to the overall progress of human civilization.

Definition of the term "market"

Market functions directly affect the meaning of the term. You can find many interpretations of it in dictionaries. The simplest and at the same time the most perfect definition is: a market is a place where buyers and sellers gather for the purpose of either purchasing a product or service, or selling it.

Other sources provide information that the market is a process of exchange, while others characterize it as a mechanism of interaction between suppliers and buyers. All proposed definitions are correct - they complement each other. As a result, it turns out that the market, the functions of which reveal the entire economic development of mankind, influences the life of both entire states and its individual residents.

The essence of the market

Underneath these two words lies a complex process that includes 4 main stages:

1. Production. At this stage, the creation of goods or services necessary for society to meet the needs and no less necessary for the manufacturer, who acts as a source of profit. This stage is the basis of the market. Without production there will be no other stages; it can even be called the “foundation” of the entire economic system.

2. Distribution. After the goods or services have been produced, the moment of distribution comes. At first glance, it may seem that this does not affect the market at all, the functions of which will not change in any way if the produced goods go to, for example, Vasya or Petya. But in fact, this moment is important, because the further development of production depends on it. To confirm these arguments, we can give an example: historians identify slave relations as one of the main reasons for the fall of the Roman Empire. The slaves were not interested in the quality of their work, which caused problems in the state's economy that led to a deep economic crisis, and then to a political one. As a result, the most powerful empire at that time collapsed.

3. Exchange. The essence and functions of the market are tied at this stage. Some dictionaries define the market with this word. And this is quite fair: the market is a place in which the exchange of some goods for others takes place. Services can act as goods. In the process of exchange, producers receive what they care so much about the quality of their products - profit, and buyers - what they need to satisfy their needs.

4. Consumption. This is the final stage in the market chain. After it, the whole cycle repeats.

Main functions of the market

Market functions influence all aspects of the economic activity of individual citizens, states, and even entire geographic regions with a population of several billion people. To date, economists have identified the main functions of the market, there are 5 in total.


Price and cost

Many people in the modern world often confuse these two concepts, but they are very important for understanding the existing market. Cost is the total cost of producing a unit of product. And the price is the amount for which this unit of goods is sold on the market. Typically, cost and price are different.

Supply and demand

By understanding what supply and demand are, you can better understand the essence and functions of the market.

Supply is the quantity of a good on the market. Demand is the quantity of a product needed by the consumer. The market price directly depends on supply and demand. The less a product is on the market, the higher the demand for it, and the price also rises. If there is an increase in supply and the quantity of goods on the market exceeds demand, prices fall rapidly. A couple of years ago, buckwheat could be bought for pennies, then a situation of unsatisfied demand emerged on the agricultural goods market. The result of this was a sharp increase in prices for this product. The same thing is happening in the oil market at present: prices for “black gold” are breaking all anti-records, dropping to less than $30.

Market Disadvantages

Every phenomenon in the world has two sides: positive and negative. The main functions of the market contain at least 3 disadvantages:

  1. The market is an unstable system and most often acts spontaneously. In a truly market economy, there is no regulatory force - it makes itself. Sometimes imbalances in production and consumption occur, which in turn leads to economic crises, the consequences of which are felt by all inhabitants of the planet.
  2. Lack of control. This fact leads to the monopolization of markets, which eliminates competition, resulting in consumer suffering.
  3. Social stratification. As a result of the uneven distribution of material wealth, classes of rich, poor and middle classes emerge. This leads to social tension, racketeering, corruption and other phenomena that corrupt society.

With all the existing shortcomings and the generation of social tension, today the market system is the most perfect. It is difficult to say which market function is the most necessary for society, but all of them together provide an overall positive dynamic for the economic development of modern states.