What is a Market?
Markets
A geographically stated area where buyers and sellers interact or communicate to decide the price of a product or a series of products.
Markets vs. Industries
Industries are the supply part of the market.
Defining the Market
The market parameters should be set before an evaluation of the market occurs.
Arbitrage
Purchasing a product at a less price in one location and selling at a large price in another market.
Competitive vs. Noncompetitive Markets
– Competitive Markets
Due to the large number of buyers and sellers, no particular buyer or seller can effect the price.
Instance: Most agricultural markets
– Noncompetitive Markets
Markets where individual manufacturers can effect the price.
Instance: OPEC
-Market Price
– Competitive markets maintain one price.
– Noncompetitive markets may set various prices for the particular product.
Market Definition - The Extent of a Market
– Market Definition
Which buyers and sellers must be involved in a particular given market?
– Market Extent
States the boundaries of the market
Geographic
variety of products
– Instances
– Geographic boundaries
Gold: Karachi vs Lahore
Housing: Rawalpindi vs. Islamabad
– Variety of Products
Gasoline: super, regular, & diesel
Cameras: point & shoot, Polaroid, digital
– Markets for Prescription Drugs
Well-established markets - therapeutic drugs
Ambiguous or confusing markets – painkillers