Types and functions of the market. Market

Today it is becoming an integral part of our life, because in order to live and prosper, a person today needs not only a number of vital necessary goods and products, but also their choice. The functions are aimed at improving the quality of service and raising the standard of living of the consumer. In order for the market to function normally, three conditions must be met: the presence of competition and free prices.

The main functions of the market:

1. Regulatory. The regulator of production here is the market through supply and demand. Thus, it establishes the necessary proportions in the economy.

2. Stimulating. Here, the market stimulates the introduction of scientific and technological progress into the enterprise, the expansion of the product range and the reduction of production costs.

1. Informational. Provides objective information about the quality, quantity and services available in the market.
2. Intermediary. The consumer is given the right to choose the optimal supplier of products.
3. Sanitizing. In market conditions, only strong viable economic units survive.
4. Social. Market participants are differentiated depending on income.

Structure, types and functions of the market:

1. Market types:

• market for goods and services
• labor market
• capital market
• information market
• financial market

2. Market mechanisms:

• free competition market
• regulated market
• monopolized market

3. Degree of market saturation:

• in short supply
• equilibrium
• excess

5. The legislative framework:

• legal market
• "black market

Market valuable papers can be considered as an independent sector, it is the source of capital attraction in the market economy. The functions of the securities market are conditionally divided into two groups: functions and specific ones, which significantly distinguish it from other markets.

General functions of the market:

1. A commercial. Responsible for making profit from operations in this market.
2. Price. Responsible for the constant movement of prices that the market provides.
3. Informational. Brings to all participants information about the objects of trade.
4. Regulatory. Creates trading rules, dispute resolution procedures, sets priorities.

Market Specific Functions:

1. Redistributive.

Responsible for:

• redistribution of funds between areas and sectors of activity.
• conversion of consumer savings into productive form.
• financing the state budget without issuing new funds into circulation.

2. The function of insurance of financial and price risks.

Market economy is a system based on freedom of choice, private property and competition. First of all, it guarantees freedom to the consumer, as it provides him with freedom of choice in the market of food and other goods and services. The main driving force of the market economy and the main motive is self-interest, only for buyers it represents the maximum benefit, and for producers - the maximum profit. The basis of healthy competition is complete freedom of choice.

Healthy competition means:

• Homogeneity of services and goods;
• A large number of buyers and sellers;
• No price discrimination;
• Complete information about prices;
• Absolute mobility of all resources.

Private property is a guarantee of non-interference of third parties in voluntarily concluded contracts; it also forms the basic basis of a market economy. Meanwhile, the classical market economy is a method due to state intervention in the economy. The government here acts as an organizer that determines the rules of the game in the market and carefully monitors the implementation of these rules.

Definition 1

Market is a place where sellers and buyers, intermediaries and manufacturers of products meet for the purpose of buying and selling. The stock market sells securities financial instruments(options, futures). The market is a combination of economic relations, which are based on constant exchange transactions between buyers and producers.

Market Functions

Market Functions varied:

• establishing links between production and consumption;
• stimulation of production efficiency and staff motivation;
• reduction of the cost part (can be achieved only with the help of advanced and innovative technology);
• stimulation of scientific and technological progress;
• many different manufacturers;
• caring attitude of the manufacturer to the quality of products.

Remark 1

It can be noted that the market and its factors always fluctuate. But the market sets up the manufacturer to produce precisely those products that are not yet on the market. Manufacturers of various products are always at risk. They calculate the situations that may arise, and often do not calculate anything. If the manufacturer is special and his products are original, then the market will react immediately and positively.

No one needs low-quality products, not a single person will buy a damaged product, except perhaps at a big discount. It is clear that the manufacturer will not cover the costs and will not receive a profit. The market always motivates manufacturers and pushes them to update products, and often to a new release of goods.

depending on the role of the player in the market :

• seller's market;
• buyer's market;
• intermediary market.

On the seller's market the main one is the seller. Buyers are very active in this market. In the buyer's market buyers are the main ones. It depends on them how the price of goods will be formed. BUT intermediary market characterized by the presence of distributors, resellers. Distributors must understand the delivery and distribution of goods.

Economic markets are subdivided depending on the turnover of the object in the market :

1. Labor market. It consists of people who want to offer their labor in exchange for cash, the so-called wages, and on the other hand, there are employers who need wage labor. For greater simplification and ease around the workers and employers, entire intermediary and consulting firms are formed.
2. Financial market. In this market, you can borrow money for a different period of time from banks, put money on deposit (for temporary storage with an increase in profitability), the bank guarantees the safety of funds.
3. Commodity market. This market is an ordinary market where buyers and sellers, intermediaries meet and exchange their products for cash.
4. Service market. This market does not sell a product, but a service. For example, renting a car is a service.

Exist market functions, which reflect its role in achieving the economic goals of society:

1. Regulating function very important. When adjusting the market, changes in supply and demand are very important - this all affects prices. Using this function, you can determine what state the market is in: in the peak, depression or growth phase. If the price of goods rises, then it is necessary to expand production. If the price falls, then production must be reduced. That's right, because when there are many competitors on the market, there are many identical products, then the price will not be able to rise high. Market prices for goods, which change every day, will help the entrepreneur understand in which direction to move and how much to load production lines. Consumers also see the benefits for themselves, they understand where you can buy goods cheaper.
2. pricing function. This function comes into play when demand, supply and competitive forces interact. When market forces play freely, prices add up.
3. stimulating function. Each subject is interested in the fact that its resources are used as rationally as possible. Price changes stimulate or spur to reduce costs, to master scientific and technological progress.
4. distribution function. Subjects receive income or payments for factors of production. Income depends on the number, the factor of production and the price that is set for this factor.
5. Information function. On the market you can find great amount sources of information, books, knowledge, which are so necessary for subjects. The availability of information helps to identify the same competitors, learn about them in more detail, come up with something else interesting to introduce in the production of new products.
6. intermediary function. Nowadays the competition is very high. Manufacturers literally on the go come up with new products, goods and products. To date, the manufacturer has the right to choose the buyer. As a rule, the manufacturer sells the goods to an intermediary, that is, a distributor.
7. sanitizing function. The market cleanses itself of low-quality goods, of economically weak economic units. The most effective subjects are encouraged and developed. Organizations and companies that do not satisfy the desires and needs of consumers fail. Their losses are very great, they subsequently become bankrupt.

Picture 1.

Remark 2

It should be noted that the concepts of "market" and "market economy" are not identical. The market economy is characterized by such features as entrepreneurial freedom, freedom of choice, free pricing, non-intervention by the state.

Remark 3

In the economic literature, rarely, but they distinguish such functions as: economic processes, increased interest in scientific and technical progress, combining the needs of buyers and production, creating conditions for labor efficiency.

All of the above functions of the market should be. This means that the role of the market in the modern economy is important. The role of the market is to find best solution problems (what, where and how to produce), to the balance of supply and demand.

The modern market has a complex market structure, covering all spheres of the economy with its influence.

The market expresses the totality of relations regarding the sale and purchase of certain types of goods. In each of the markets, purchase and sale relations arise between different entities, acting either as sellers or as buyers.

The main elements of the market are:

In order for the market to function successfully, three conditions are necessary: ​​the presence of private property in the economy, free prices and competition.

What are the functions of the market?

1. Regulatory - the market acts as a regulator of production through supply and demand. Through the law of demand, he establishes the necessary proportions in the economy.
2. Stimulating - by means of prices, the market stimulates the introduction of scientific and technological progress into production, reducing production costs and increasing quality, as well as expanding the range of goods and services.
3. Informational - gives objective information about the socially necessary quantity, assortment and quality of those goods and services that are supplied to it.
4. Intermediary - in a market economy, the consumer has the opportunity to choose the optimal supplier of products.
5. Sanitizing wound cleans social production from economically weak, unviable economic units and encourages the development of efficient and promising firms.
6. Social - the market differentiates the income of market participants.

What is the market structure?

Market structure:

1. by market objects

• market for goods and services
• capital market
• labor market
• financial market
• information market

2. by geographic location

• local
• regional
• National
• world

3. according to the mechanism of functioning

• free competition market
• monopolized market
• regulated market

4. by degree of saturation

• equilibrium market
• scarce market
• excess market

5. according to current legislation

• legal market
• illegal market

What is a market economy?

The market economy is characterized as a system based on private property, freedom of choice and competition, which relies on personal interests, limits the role of government. The market economy guarantees, first of all, the freedom of the consumer, which is expressed in the freedom of consumer choice in the market of goods and services. Self-interest is the main motive and the main driving force of the economy. For consumers this interest is utility maximization, for producers it is profit maximization. Freedom of choice becomes the basis of competition.

Perfect competition means:

• many buyers and sellers
• homogeneity of goods and services,
• no price discrimination
• full mobility of all resources,
• absolute price awareness.

In reality, there are circumstances that deviate significantly from the ideal and turn perfect competition into imperfect. This means that economic freedom exists as a potentiality, as an opportunity, the transformation of which into reality is modified by many circumstances and, ultimately, by the level of economic development.

The basis of a market economy is private property. It is a guarantee of compliance with voluntarily concluded contracts and non-intervention of third parties.

The classical market economy proceeds from the limited role of government intervention in the economy. The government is necessary only as a body that has determined the rules of the market game and monitors the implementation of these rules.

The market is the sphere of manifestation of relations between producers of goods and consumers, value and consumer value, i.e. the usefulness or ability of a product (service) to satisfy a need of people. In other words, the market is the process of interaction between sellers and buyers to sell and buy goods based on determining their prices and quantities (supply and demand).

It is a tool for the spontaneous distribution of economic resources - work force and means of production - between different areas application, ultimately carried out in accordance with the will of the consumer.

Under the conditions of the studied form of economy, market relations cover the entire system and all subjects of economic relations. The market includes both entrepreneurs and workers who sell their labor, and end consumers, and owners loan capital, owners of securities, etc. The main subjects of the market economy are usually divided into three groups: households, business (entrepreneurs) and the government.

The household is the main structural unit functioning in the consumer sector of the economy. It may consist of one or more people. Consumed within the household final products spheres of material production and services. Households are the owners and suppliers of factors of production in a market economy.

A business is a business enterprise that operates for the purpose of generating income (profit). It involves an investment in a business of own or borrowed capital, the income from which is spent not just for personal consumption, but for expansion production activities. A business is a supplier of goods and services in a market economy.

The government is represented mainly by various budget organizations, which do not aim to make a profit, but implement the functions state regulation economy.

Main character traits market can be summarized as follows:

• - The presence of isolated commodity producers, independently determining the methods and forms of organization of production, the volume, range and quality of products; choosing suppliers and consumers; setting prices; distributing residual profits; bearing financial responsibility for the results of their activities.
• - Free pricing. Most of the prices in the market are set spontaneously on the basis of the laws of supply and demand. State control for prices is allowed only in a limited area (baby food, dietary products, essential goods).
• - Competition - the main engine of market relations, economic competition between different producers for more profitable terms production and marketing of goods, encouraging them to focus on demand.

Thanks to market competition, the search for unused factors of production is continuously carried out, the creation of new life goods, the quality of goods and services increases, and prices are reduced.

The market mechanism is based on two interrelated and interdependent elements - supply and demand.

Demand is the amount of a product that consumers are willing and able to buy at a certain price over a certain period of time with the material resources at their disposal. It is subdivided into the demand of enterprises for means of production, labor force and the demand of the population. The volume of demand is determined by the sum of the incomes of enterprises and the population.

Supply - the quantity of goods that sellers are willing to produce and offer for sale on the market at competitive prices from a range of possible prices over time.

The interaction of supply and demand in a particular market in a certain period of time is determined by the establishment of the optimal price level for a given product or service, which is called the equilibrium or market price.

The degree of balance between supply and demand reflects the state of the market-type economy, the effective functioning of the entire market system. Rational use resources can only be in terms of equalizing the magnitude of supply and demand.

Market Functions

Established in society, market relations have a huge impact on all aspects of economic life, performing a number of significant functions.

• 1) Informational - through constantly changing prices, interest rates on credit, the market provides production participants with objective information about the socially necessary quantity, assortment and quality of those goods and services that are supplied to the market. This allows each enterprise to constantly reconcile own production with changing market conditions.
• 2) Intermediary - economically isolated producers in conditions of a deep social division of labor must find each other and exchange the results of their activities. Without a market, it is almost impossible to determine how mutually beneficial this or that technological and economic connection between specific participants is. social production. In a normal market economy with sufficiently developed competition, the consumer has the opportunity to choose the optimal supplier. At the same time, the seller is given the opportunity to choose the most suitable buyer.
• 3) Pricing - products and services of the same purpose that usually enter the market contain an unequal amount of material and labor costs. But the market recognizes only publicly necessary costs, only the buyer agrees to pay them. Consequently, a reflection of socially necessary value is formed here. Thanks to this, a mobile relationship is established between cost and price, which is sensitive to changes in production, needs, and market conditions.
• 4) Regulatory - associated with the impact of the market on all sectors of the economy, and, above all, on production. An important role in market regulation is played by the ratio of supply and demand, which significantly affects prices. A rise in price is a signal to expand production, a fall in price is a signal to reduce it. As a result, the spontaneous actions of entrepreneurs lead to the establishment of optimal economic proportions.
• 5) Sanitizing. With the help of competition, the market clears social production of economically unstable, unviable economic units and, on the contrary, gives the green light to more enterprising ones. As a result of this, the average level of sustainability of the entire economy as a whole is continuously increasing.

The main motive for the economic behavior of people in the world is to receive personal income. The market system turned out to be the most suitable for combining personal and public economic interests, which are expressed in the advantages of market economy:

• - efficient distribution of resources: the market directs resources to the production of goods needed by society;
• - the possibility of successful operation in the presence of limited information: it is enough to have data on the price and production costs;
• - flexibility, high adaptability to changing conditions;
• - optimal use of the results of scientific and technical progress. Commodity producers take risks, develop new products, introduce the latest technology which allows you to have advantages over competitors;
• - freedom of consumers and entrepreneurs in economic life;
• - the ability to meet a variety of needs, improve the quality of goods and services.

There are the following types of markets:

• - Market food products, is intended for sale by sellers and purchase by buyers of food products.
• - Market of industrial (non-food) consumer goods, is intended for the sale of a wide group of durable or short-term consumer goods, including clothing, footwear, haberdashery and perfumery items, household goods, furniture, books, medicines, certain types building materials, instruments, vehicles personal use and other goods of a similar purpose.
• - The market of means of production, there is a market of means and objects of labor. This is an exceptionally vast market, covering all material and technical objects directly or indirectly used in production.

It is divided into three types:

• real estate market (purchase and sale of buildings, structures, structures, premises used for production purposes).
• · the market of machines (technological equipment, instruments and apparatus for industrial purposes).
• · the market of raw materials, materials, energy, semi-finished products, from which and through which products are made.
• - The stock market, or the securities market (the market financial assets), is a money market in which some financial resources sold in exchange for others. On the one hand, in such a market "today's" money is bought and sold in exchange for "tomorrow's", i.e. on credit. On the other hand, the currency of one state is sold in exchange for the currency of another - this currency market. And finally, securities in the form of stocks, bonds, lottery tickets are sold and bought for money. The location of the financial market - stock exchanges, banks, points of sale and purchase of securities, currencies.

Taking into account the rule of law in the economy, markets are divided into: legal, official; illegal, "shady".

The main types of markets are divided into various sub-markets, market segments. Market segmentation is the division of consumers of a given product into separate groups that impose different requirements on the product. A market segment is a part of a market, a group of consumers, products or businesses that are formed on the basis of certain common features. Segmentation can be carried out in different ways using various factors (features).

The market structure can be divided according to the following criteria:

• 1. According to the economic purpose of objects of market relations:
  • - markets for consumer goods and services;
  • - markets for means of production;
  • - markets for scientific and technical developments;
  • - securities markets;
  • - Labor markets.

The formation of such markets involves a fundamental change in the entire system of interactions between enterprises; transition to the sale of goods on the basis of direct links. The most important instrument of such a market is the creation of market structures in the form of commodity and stock exchanges, special bases, commercial centers, and a system of enterprises. wholesale trade.

• 2. by product groups:
  • - markets for industrial goods;
  • - consumer goods markets;
  • - food markets;
  • - markets for raw materials and materials, etc.
• 3. on a spatial basis:
  • - intra-regional;
  • - interregional;
  • - republican;
  • - inter-republican;
  • - international (global).

The formation of such markets is especially important in the context of the acquisition by the republics of state sovereignty, the conclusion of inter-republican agreements.

• 4. According to the degree of restriction of competition, monopoly, oligopolistic, intersectoral markets are distinguished.
• 5. By types of subjects of market relations, markets can be divided into: trading commercial competition
• - wholesale markets, when enterprises and organizations act as buyers and sellers;
• - markets retail when the sellers are enterprises and organizations, and the buyers are individual citizens;
• - markets public procurement agricultural products, when the buyer is the state, and the sellers are the direct producers of agricultural products (agricultural enterprises, farms).

As the historical experience of the civilization of the 16th-20th centuries shows, the movement of a healthy economic system, focused on the criteria of efficiency and the ability to self-regulate, took place on the basis of market relations. World history, in fact, did not know a highly efficient non-market economy.

As a phenomenon of economic life, the market arose as a result of the natural-historical development of production and exchange, which gave rise to commodity management. The market was formed during the formation of commodity production, and is its integral and most important element. Thus, the reasons for the existence of the market lie in the causes of commodity production.

The market, first of all, acts as an exchange of goods, organized according to the laws of movement of commodity relations. Since ancient times, the market has been defined as a place (marketplace) where goods are bought or sold. That is why for many the word "market" is associated with a bazaar - a place for the exchange of goods produced. But this is only partially true. The market is a broader and more capacious concept. These are also shops, department stores, supermarkets, various stalls where daily consumption goods are bought. There are markets where securities (stocks, bonds) are sold and bought - stock exchanges. On the commodity exchanges grain, sugar, cement, etc. are offered. The relationships between sellers and buyers regarding existing and potential goods form markets.

However, the market is not just a sphere of exchange, but such a sphere in which the exchange of goods is carried out according to public assessment, which is reflected in the price. That is, the balancing of acts of sale must be achieved with the help of prices. The market acts as a mechanism through which the balance of supply and demand is achieved.

Market entities are physical and legal entities who enter into economic relations exchange of goods and services in some cases as consumers, in others - as producers. The subjects are individual producers, firms, families, organizations, the state, etc.

Market objects- These are specific groups of goods and services that have a steady demand, constantly entering the market. Market objects are goods, services, technologies, information, etc.

The essence of the market is revealed more fully through the functions that it performs. The main ones are as follows: regulating, controlling, distributive, stimulating, integrating (Fig. 1.3).

Regulatory the function of the market is to regulate the production of goods and services, setting the proportions of social production. The market itself dictates what and how much to produce.

Controlling the function of the market determines the social significance of the product produced and the labor spent on its production.

Distribution the function of the market ensures the balance of the economy, differentiates the incomes of commodity producers, and identifies winners and losers.

stimulating the function of the market encourages those who most rationally use the factors of production to obtain the best final results, stimulates the growth of labor productivity, the use new technology etc. That is, the market returns the economy to the needs of people, makes all participants in the competitive process materially interested in meeting these needs.

Integrating the function of the market unites the economy into a single whole, revealing a system of horizontal and vertical ties (enterprises, industries, regions), including foreign economic ones. The market facilitates the penetration of goods into various countries and parts of the world.

Knowledge of the market is impossible without analyzing its structure i.e. elements of which it is composed and which interact with each other. To do this, you should choose a criterion by which you can distinguish between the elements of the market. There may be several such criteria, because the market is a salaried and diverse formation of economic life.

rice. 1.3 Main functions of the market

So, from the point of view of the economic purpose of objects of market relations, the market can be classified as:

Market of consumer goods and services;

Market of means of production;

Market of scientific and technical developments and information;

market "know-how";

Labor market;

Securities market (financial market);

Currency market.

The structure of the market can be characterized by an administrative-territorial basis or by geographical location:

Local market;

Market of individual territories;

Market of individual regions;

National (domestic) market;

World;

Market of coalitions of various countries (EU, CIS, etc.).

The market can be characterized depending on the degree of development of market relations:

Developed market;

The market that is being formed.

Depending on the degree of restriction of competition, there are:

monopolistic market;

Oligopolistic market;

Free competition market (free market);

mixed market.

In accordance with the current legislation, there are:

Legal (official) market;

Illegal (shadow) market;

By the nature of the sale are distinguished:

Wholesale market (wholesale market);

retail market(retail market). The formation of a market economy in Ukraine should begin with the reproduction of market institutions, which are now in their infancy. This should take place according to a scheme that would take into account economic, political, historical and psychological factors characteristic of our country. The main principles of the market are: full economic independence of business entities; free prices; economic competition; developed market infrastructure; sustainable financial and monetary system; close connection with the world market (Fig. 1.4).

Rice. 1.4. Basic principles of the market

An important element reproduction of the market environment is the market infrastructure. Market infrastructure is a set (system) of enterprises and organizations that ensure the movement of goods, services, money, securities, labor, etc. Such institutions include: stock exchanges, banks, dealer and brokerage houses, employment services, wholesale and post-sales organizations, investment companies, insurance organizations, audit firms etc.

The main tool for creating a market model should not be a spontaneous play of forces, but an active and consistent activity of the state to create the necessary institutions of a market economy, which includes the following main elements: market mechanism; methods of state regulation; level and degree of public consciousness; effective mechanism social protection population (especially in transition).