Conditions for the successful functioning of the market. Market Conditions
Market Conditions
For the successful functioning of the market and the performance of its functions, a number of conditions must be met:
freedom of economic, economic, entrepreneurial activity;
free market prices, which are set on the basis of the interaction of supply and demand;
competition, which is the basis of the market;
flexible state regulation of the market that does not suppress or destroy the market;
sustainable monetary and financial system;
stable political environment.
As conditions for the normal functioning of the market, some economists also distinguish:
variety of forms of ownership;
the commodity producer must be the owner of the means of production and freely dispose of the results of his labor;
freedom of production and commercial activities all participants social production;
well-established system of monetary and financial relations;
maintaining healthy competition;
developed infrastructure.
Classification of markets. Types and types of markets. Systems, structure and infrastructure of the market
The market has complex structure, covering all spheres of the economy with its influence.
The structure of the market is the internal structure, location, order of individual elements of the market.
We can name the following features of the market structure: close ties between its elements; a certain stability of these links; integrity, the totality of these elements.
The market covers elements directly related to the provision of production, as well as elements of material and monetary circulation. The presence of various forms property and management, features of the sphere of commodity circulation, the level of denationalization and privatization and other factors. It is also connected with the non-productive sphere and even with the spiritual sphere (the area of paid sale of products of intellectual activity of scientists, writers, artists, etc.). All this determines the complex structure of the market, the diversity of its types and types.
The totality of all markets, divided into separate elements on the basis of various criteria, forms a system of markets.
In the economic literature, more than a dozen criteria are distinguished for characterizing the structure and system of the market, its classification. Let's consider some of them.
1. By economic purpose objects of market relations:
Market of goods and services (consumer market);
Stocks and bods market;
labor market (market work force);
Market and currencies;
information market;
Market of scientific and technical developments (patents, know-how licenses), etc.
2. By commodity groups:
Markets for industrial goods;
Markets consumer goods(for example, food);
Raw materials markets, etc.
3. By geographical location:
Local (local) markets;
Regional markets;
World market.
4. By subjects or their groups:
buyers market;
Sellers market;
Market public institutions;
The market of intermediate sellers - intermediaries, etc.
5. According to the degree of restriction of competition:
Monopoly market;
Oligopolistic market;
Market monopolistic competition;
Market perfect competition.
6. By saturation level:
Equilibrium market;
Scarce market;
Excess market.
7. According to the degree of maturity:
Undeveloped market;
Developed market;
Emerging market.
8. According to legislation:
Legal (official) market;
Illegal, or shadow, market ("black" and "gray").
9. By the nature of sales:
Wholesale market;
Retail market.
10. By the nature of the range of goods:
A closed market where only the products of the first manufacturer are presented;
A saturated market with many similar products from many manufacturers;
A broad range market in which there are a number of types of goods related to each other and aimed at satisfying one or more related needs;
A mixed market in which there are a variety of goods that are not related to each other.
11. By industry feature:
car market;
oil market;
Market computer technology etc.
In the market structure, the following types of markets are also highlighted:
- - Markets for goods and services, which include markets for consumer purposes, services, housing and buildings for non-industrial purposes.
- - Markets for factors of production, which include markets for real estate, tools, raw materials, energy resources, minerals.
- - Financial markets, i.e. capital markets (investment markets), credit, securities, currency and money markets.
- - Markets of an intellectual product, where innovations, inventions, information Services, works of literature and art.
- - Labor markets, which are economic form movements (migrations) labor resources(work force).
For the normal functioning of the market, a well-organized work of various specialized agencies, enterprises, organizations and services. The system of such institutions, enterprises, organizations and services that ensure the movement of goods and services is a market infrastructure.
Market infrastructure is defined in different ways:
as a complex of elements, institutions and activities that create organizational and economic conditions for the functioning of the market;
as a set of institutions, organizations, state and commercial enterprises and services that ensure the normal functioning of the market;
as a set of market institutions that serve and ensure the movement of goods and services, capital and labor.
In general, infrastructure can be defined as a set of institutions, systems, services, enterprises and organizations that serve the market and perform certain functions to ensure its normal functioning.
The main elements of the market infrastructure in modern conditions are:
exchanges (commodity, commodity, stock, currency), their institutionalized mediation;
auctions, fairs and other forms of organizational over-the-counter mediation;
credit system, commercial banks;
issuing system, issuing banks
the system of regulation of employment of the population and the centers of state and non-state employment assistance (labor exchanges);
information technologies and means of business communication;
tax system and tax inspection;
various risks insurance system and insurance companies;
chambers of commerce, other public, voluntary and state associations (associations) of business circles;
customs system;
employee unions;
commercial and exhibition complexes;
system of higher and secondary economic education;
audit companies;
advisory (consulting) companies;
public and state funds intended to stimulate business activity;
special free trade zones.
One of the most characteristic features organization and functioning economic systems in modern conditions is a high level of market development, market relations.
It should be noted that the concepts of "market" and "market economy" are not identical. The market economy assumes a high level of market development and is characterized by such basic features as freedom of enterprise (complete independence economic activity, economic responsibility and rationalism); free pricing (government intervention in the process of setting prices for many types of goods is excluded, prices provide extensive operational information about the demand and supply of goods, production costs, the situation on the markets of individual regions, countries and the world community); competition (regulates prices and quantity of goods produced). Ultimately, any subject, pursuing its own interests, serves the interests of society more effectively.
In the economic literature, several functions performed by the market are distinguished, which reflect its role in achieving the specific economic goals of society.
- Regulatory function is the most important. In market regulation great importance has a supply-demand ratio that affects prices. The implementation of this function allows you to find answers to the questions of what, how and for whom to produce. Rising price is a signal to expand production, falling - to reduce. The market tells producers what to produce, what goods and services to refuse to produce or to reduce the volume of their output. No less valuable information is provided by the market to consumers. Based on it, they constantly make choices about how best to satisfy their many needs. As a result, capital from less profitable industries with lower prices is poured into more profitable industries with higher prices. Through the mechanism of the law of value, supply and demand, the market contributes to the establishment of basic micro- and macro-proportions in the economy, ensures dynamic proportionality in trade between different regions and national economies.
- · Pricing function: realized in the collision of supply and demand, as well as due to the action of competitive forces. As a result of the free play of these market forces, prices for goods and services are formed, a mobile relationship is established between value and price, which is sensitive to changes in production, in needs, in the market situation.
- · Stimulating function: through prices, the market stimulates the development of scientific and technological progress, cost reduction, quality improvement, expansion of the range of goods and services. Since each subject of market relations directly feels the results of decisions made, he is interested in the most rational use the resources he has.
- · distribution function: the incomes received by market entities are mainly payments for the factors of production that they possess. The amount of income depends on the quantity and quality of the factor of production and on the price that is set in the market for this factor.
- · Information function. The market is a rich source of information, knowledge, information needed by business entities. It provides, in particular, objective information about the socially necessary quantity, range and quality of those goods and services that are supplied to the market. The availability of information allows each firm to constantly check own production with changing market conditions.
- intermediary function. Economically isolated producers in conditions of deep public division labor should find each other and exchange the results of their activities. In a normal market economy with sufficiently developed competition, the consumer has the opportunity to choose optimal supplier products. At the same time, the seller is given the opportunity to choose the most suitable buyer.
- Sanitizing function. The market clears social production of economically weak, unviable economic units, and at the same time encourages the development of the most efficient, enterprising, promising structures. Enterprises that do not take into account the needs of consumers suffer losses and go bankrupt, while socially useful and efficient enterprises develop successfully.
In the economic literature, some other functions of the market are sometimes distinguished: activation economic interests, increasing the receptivity of the economy to scientific and technological progress, the reduction of productive forces in single system, stimulating efficiency economic activity, the reduction of needs with production, the creation of conditions for the effectiveness of labor cooperation.
The implementation of the noted functions allows us to speak about the important role of the market in the modern economy. Ultimately, as can be inferred from the above functions, the role of the market is primarily to find optimal solution problems of what, how and for whom to produce; ensuring the balance of supply and demand and the balanced development of the economy; differentiation of commodity producers in terms of the effectiveness of their activities.
Conditions for the functioning of the market
For the successful functioning of the market and the performance of its functions, a number of conditions must be met:
- freedom of economic, economic, entrepreneurial activity;
- free market prices, which are set on the basis of the interaction of supply and demand;
- competition, which is the basis of the market;
- · flexible state regulation of the market, which does not suppress or destroy the market;
- • sustainable monetary and financial systems;
- a stable political environment.
As conditions for the normal functioning of the market, some economists also distinguish:
- 1. variety of forms of ownership;
- 2. The commodity producer must be the owner of the means of production and freely dispose of the results of his labor;
- 3. freedom of production and commercial activities of all participants in social production;
- 4. a well-established system of monetary and financial relations;
- 5. maintaining healthy competition;
- 6. developed infrastructure.
Functioning market economy carried out on the basis of certain principles. Among them are:
- · Economic freedom of activity of subjects of economy.
- · Universality of market relations.
- · Equality of market subjects.
- · Free pricing.
- · Self-regulation of economic activity.
- The contractual nature of the relationship.
- · Economic responsibility of subjects.
- · Self-financing.
- · Competition.
- · State regulation economy.
Personalized property, when the commodity producer is the owner of the means of production and freely disposes of the results of his labor
Freedom of production and commercial activities of all participants in social production
The ability of manufacturers and managers to integrate into market relations in an organized and psychologically correct way
Well-established system of credit and financial relations
Rice. 54 Conditions for the normal functioning of the market
Availability of independent commodity producers, freedom of entrepreneurial activity and guarantees of property rights of various economic entities
Free market prices balancing supply and demand
Producer competition
Free flow of capital between industries and regions
Formation of a financial market, including the market for credit resources, the securities market and the foreign exchange market
Availability of a labor market, hired labor force with a developed system of its training, retraining, intersectoral and interregional overflow
Openness of the economy to global integration processes, the possibility of migration of labor, goods and capital
Rice. 55 General laws of the formation of a market economy
7. Transition economy: essence, features, development trends. The role of the state in a transitional economy
Types of indirect state intervention in the economy
Rice. 56 Indirect government intervention in the economy
Microeconomics
1. Theory of supply and demand
Rice. 57 Individual demand curve
The individual demand curve is presented as a downward DD curve because there is an inverse relationship between price and quantity demanded.
Changes in demand
Rice. 58 Changes in demand
A change in one or more determinants of demand causes a change in demand. An increase in demand shifts the demand curve to the right, for example from D I to D 2 . A decrease in demand shifts the demand curve to the left, for example from D 1 to D 3 . A change in quantity demanded leads to a displacement caused by a change in price this product, from one point to another on a constant demand curve, on our chart - from a to b.
Offer amount
Rice. 59 Individual offer curve
The direct relationship between the quantity supplied and the price of a product can be shown graphically: it is expressed in the upward direction of the supply curve.
On the graph, the individual supply curve is represented as an ascending SS curve, since there is a direct relationship between the quantity supplied and the price: according to the law of supply, producers produce more of a product if the price of it rises.
Changes to the offer
Rice. 60 Changes in offer
An increase in supply shifts the supply curve to the right, from S 1 to S 2 . A decrease in supply shifts the supply curve to the left, from S 1 to S 3 . Moving from a to b means a change in the size of the offer.
Changes in supply and demand
Rice. 61 Changes in supply and demand and their impact on the price and quantity of the product: a - an increase in demand; b - decrease in demand; c - increase in supply; d - decrease in supply
Factors influencing supply and demand
Price is the main factor influencing demand.
Price is the main factor influencing supply.
Resource prices
Change of technique and technology
Taxes and subsidies
Number of manufacturers
Price Change Expectations
R
Prices for related products
Non-price supply factors
Resource prices
Improvement of engineering and technology
Taxation level
Prices for related products
Producers' expectation of price changes in the market
Rice. 63Non-price supply factors
Factors affecting demand
Consumer income
Consumer preferences and tastes
Prices for related products
Number of consumers
Consumer expectations
Rice. 64 Non-price factors of demand
Equilibrium price and quantity of the product
Rice. 65 Equilibrium price and quantity of a product are determined by market demand and supply
Price ceiling
Rice. 66 Price ceilings lead to sustained shortages
The state can set a price ceiling (higher) and a lower price level. A price ceiling is a statutory maximum price a seller is allowed to charge for their product or service.
Low price level
Rice. 67 Setting a price floor leads to a steady surplus of production
The existence of a lower price level, for example, Pf, leads to the formation of a stable surplus of production, the value of which is measured by the segment OdOs. The government must either buy this surplus, or take measures to eliminate it by limiting the supply or increasing the demand for this product.
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For the successful functioning of the market and the performance of its functions, a number of conditions must be met:
freedom of economic, economic, entrepreneurial activity;
free market prices, which are set on the basis of the interaction of supply and demand;
competition, which is the basis of the market;
· flexible state regulation of the market, which does not suppress or destroy the market;
• sustainable monetary and financial systems;
a stable political environment.
As conditions for the normal functioning of the market, some economists also distinguish:
The functioning of a market economy is carried out on the basis of certain principles. Among them are:
Classification of markets.
The market has its own structure.
Market structure- this is the internal structure, location, order of individual elements of the market.
The following features of the market structure can be named:
close links between its elements;
a certain stability of these connections;
Integrity, the totality of these elements.
Despite the lack of a generally accepted classification of markets, they can be divided into groups according to certain criteria:
· The market of perfect (free) competition is characterized by the presence of many sellers, the homogeneity of products. The seller of products does not have the ability to influence the price level.
· The market of monopolistic competition is characterized by the presence of many sellers. A product has certain properties that distinguish it from others. The seller is able to influence the price of his products (to a certain extent).
· Oligopolistic market characterized by the presence of few sellers. They offer homogeneous or differentiated products. Prices are set according to the type of leadership, i.e. most firms seek to set the same price as the largest firms in this market.
A monopoly market is characterized by the presence of one seller. It sets the maximum high price, but within effective demand.
· Local market
· Regional market
· National market.
Buyer's market
Sellers Market;
· The market of public institutions;
The market of intermediate sellers - intermediaries, etc.
Market of goods and services
· Labor market
· Financial market
· Real estate market
· Currency market
In addition, the market is divided into:
By nature of sales:
According to the degree of regulation:
Saturation level:
For legal compliance:
By product groups:
· The market of industrial goods;
· The market for consumer goods (for example, food);
· Market of raw materials and materials, etc.
By degree of maturity:
· Undeveloped market;
· Developed market;
· Emerging market.
By the nature of the product range:
· Closed market, where only the products of the first manufacturer are presented;
· Saturated market, which presents a lot of similar products from many manufacturers;
· A market of a wide range, in which there are a number of types of goods related to each other and aimed at satisfying one or more related needs;
· A mixed market in which there are a variety of products that are not related to each other.
By industry:
· Car market;
· Oil market;
· Computer equipment market, etc.
There are also the following types of markets:
· Markets for goods and services, which includes markets for consumer purposes, services, housing and buildings for non-industrial purposes.
· Factor markets, which include markets for real estate, tools, raw materials, energy resources, minerals.
· Financial markets, i.e. capital markets (investment markets), credit, securities, currency and money markets.
· Smart Product Markets, where innovations, inventions, information services, works of literature and art act as objects of sale.
· labor markets, representing the economic form of movement (migration) of labor resources (labor force).
AT real practice the main types of markets are divided into various sub-markets, or market segments.
Market segmentation- this is the division of consumers of this product into separate groups that impose different requirements on the product. Market segmentation can be carried out in different ways using various factors:
