The market in the world of economics is defined as a group of individuals and establishments who wish to exchange interests between each other. The market can be on the ground, or it can be virtual, such as electronic markets that are managed via the Internet, meaning that the market has no geographical borders. The market is defined in classical theory as a theoretical place where supply and demand for goods or services meet. The market achieves equilibrium if the quantity demanded is equal to the quantity supplied. If this equality is not achieved, this affects the price, so the price rises if the quantity demanded is higher than the quantity offered and vice versa. This is the dynamic in which the market works.
Markets are divided into different sections according to the purpose they serve, and the price is determined based on supply, which refers to the quantity that sellers want to sell, and demand refers to the quantity of goods and services that sellers want to buy, and through the meeting of supply and demand, the price is determined, and this is what happens in capitalist countries. Which is basically based on a market economy, where the price is determined based on demand, supply, and dynamism within the market, unlike socialist countries where the price is determined based on government planning and state intervention.
Types of economic markets:
- Perfect competition.
- Total monopoly.
- Monopolistic competition.
- Oligopoly.
First: Perfect competition:
A perfectly competitive market is characterized by a set of characteristics, which are as follows:
- Large number of buyers and sellers: In a perfectly competitive market, there are large numbers of buyers and sellers. This means that any individual seller or buyer cannot influence the price.
- Product Homogeneity: In a perfectly competitive market, products are homogeneous. This means that all the products offered by the companies are almost the same.
- Freedom to enter and exit the market: In a perfectly competitive market, it is easy for firms to enter and exit the market. This means that companies that cannot achieve profits will exit the market, and will be replaced by new companies that are able to achieve profits.
- Perfect Knowledge: In a perfectly competitive market, all participants have perfect knowledge of the market. This means that all participants know current prices, production costs and demand forecasts.
Second: Complete monopoly:
It is a completely opposite case to the market of perfect competition. This market for a commodity is considered a market of complete monopoly if the market is characterized by several characteristics, which are as follows:
- High prices: In a perfect monopoly market, the seller has the ability to set the price he wants. This means that prices are often above the equilibrium level in a perfectly competitive market.
- Low productive efficiency: In a perfect monopoly market, there is no incentive for the seller to reduce costs or increase output. This leads to decreased production efficiency and increased cost of goods and services for consumers.
- Distribution inefficiency: In a perfect monopoly market, resources are not distributed fairly between consumers and firms. This is because the seller receives excess profits, while consumers pay more than they should.
In a perfect monopoly market, there is only one seller or buyer of goods or services. This means that this seller or buyer has complete control over the market, whether it determines the price or the quantity produced, which greatly affects the average consumer, and there are no restrictions on what he can do.
Third: Monopolistic competition:
It is characterized by the presence of many companies that provide similar, but not identical, products or services. This means that products or services are not complete substitutes, but consumers can choose between them based on factors such as quality, price, and additional services. As a result, firms in a monopolistic competition market have a limited degree of control over prices. They can raise prices slightly above the equilibrium level in a perfectly competitive market, but they cannot raise them significantly, as they will lose customers to competing firms that offer more attractive products or services. In addition, entry and exit from the market are possible in a monopolistic competition market, but not as easy as in a perfectly competitive market. This is because new companies will need to offer a distinct product or service in order to attract customers.
Fourth: Oligopoly:
The oligopoly market is characterized by the small number of sellers who sell homogeneous and heterogeneous goods. This market falls between complete monopoly and monopolistic competition, where a limited number of sellers dominate the market and control the price of the product. There are characteristics that characterize the oligopoly market, which are as follows:
- Small number of sellers.
- Interconnection between companies.
- Increase advertising.
- Group behaviour.
- The competition.
- The demand curve is indeterminate.
The following table identifies the different types of economic markets depending on the number of sellers and buyers:
| Supply demand | 1 seller | Some sellers | Huge number of sellers |
| One buyer | Duopoly | Nuisance monopsony | Monopoly purchase |
| Some buyers | Annoying monopoly | Duopoly oligopoly | Minority monopoly |
| Huge number of buyers | Monopoly | Minority monopoly | Perfect competition |
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