Market occupies an important place in Micro-economic theory. It is the meeting point of buyer’s demand and seller’s supply of commodity. The equilibrium price is determined in the market by interacting demand for the product with the supply of a product.
This equilibrium price and price mechanism plays a very pivotal role in a market economy or in capitalist economy. In such a economy all types of decisions relating to production, consumption, exchange and distribution are determined by the market.
Therefore, market is the focus of a capitalist economy. Keeping in view the importance of market Prof Wick stead pointed out that “the market is the characteristic phenomenon of economic life. The constitution of market and market forces are the central problem of economics.”
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Meaning of Market:
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The term ‘market’ ordinarily refers to a place of locality where buyers and sellers gather to carry on the process of buying and selling. We speak of Delhi market, Cuttack market, Bhubaneswar market etc. Ordinarily speaking, market thus refers to a place.
Markets were localised in the past due to transport and communication difficulties. Transport and communication facilities have greatly improved today.
Further, standardisations of many commodities have enabled the buyers to purchase them by description. There are many commodities now like gold, rice and wheat etc., having worldwide market.
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But the term ‘market’ in economics has no reference to a particular place. Instead market in economics refers to a commodity which is bought and sold. For example, we speak of the gold market, the wheat market, the cotton market, the sugar market so on.
Market has been variously defined by different economists.
John F. Due defines market “as a group of buyers and sellers in sufficiently close contact with one another that exchange take place among them.”
According to Stonier and Hague “A market is an organisation where the buyers and sellers are kept in close touch with each other.”
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In the words of Cairn cross, a market is “simply the network of dealing in any factor or product between buyers and sellers.”
According to French Economist Cournot, “Economists understand by the term market not any particular market place in which things are bought and sold but the whole of any region which buyers and sellers are in such free intercourse with one another that the prices of same goods tend to equality easily and quickly.”
From the above definitions it is clear that market refers to the buyers and sellers of an economic good having close contact with one another so that exchange of goods and services take place among themselves.