ECONOMIC INSTITUTION:

MARKET TRANSACTIONS
 Topics to
Tackle

MARKET
MARKET
STRUCTURES

MARKET TRANSACTIONS

TYPES OF MARKET
 What
Is
MARKET?

Is any structure that allows

buyers and sellers to
exchange any type of goods,
services and information.
KEY TAKEAWAYS
•A market is a place where buyers and sellers can
meet to facilitate the exchange or transaction of goods
and services.
•Markets can be physical like a retail outlet, or virtual
like an e-retailer. Other examples include the black
market, auction markets, and financial markets.
•Markets establish the prices of goods and services
that are determined by supply and demand.
THE 3 BASIC PROBLEMS OF THE
CAPITALIST ECONOMY
What goods and services should be
produced?
How should these goods and services be produced?
Who consumes these goods and
services?
 WHAT
IS
MARKET
STRUCTURE?

- is the interconnected characteristics of

a market, such as the number and
relative strength of buyers and sellers
and degree of collision among them,
level and forms of competition, extent
of product differentiation and ease of
entry into and exit from the market.
 4 TYPES
OF
MARKET
STRUCTUR
E
 PERFECT
COMPETITION
Many Buyers and Sellers
Perfect Competition : describes a market structure where a large
number of small firms compete against each other. None of the firms
can influence market prices.
 OLIGOPOLY
Several large sellers who have control over the prices
Oligopoly : describes a market which is dominated by only small
number of firms. That results in a state of limited competition.
The firms can either compete against each other or collaborate. By
doing so, they can use their collective market power to drive up
prices and earn more profit.
 MONOPOLY
Single seller with considerable control over the prices
Monopoly : refers to a market structure where a single firm controls
the entire market. In this scenario, the firm has the highest level of
market power, as consumers do not have any alternatives. As a result,
monopolies often reduce output to increase prices and earn more
profit.
 MONOPSONY
Single buyer with considerable control over demand and prices
Monopsony: is a market structure in which a single buyer
substantially controls the market as the major purchaser of goods
and services offered by many would be sellers.
 - may involve goods, services,
MARKET
TRANSACTIONS
informations, currency of any
combination of these that pass
from one party to another.
How Market Transactions Work?
Markets are arenas in which buyers and sellers can gather and
interact. In general, only two parties are needed to make a
trade, at minimum a third party is needed to introduce
competition and bring balance to the market. As such, a market
in a state of perfect competition, among other things, is
necessarily characterized by a high number of active buyers
and sellers.
 TYPES
OF
MARKET
 FINANCIAL
MARKET
The blanket term financial market refers to any place where
securities, currencies, bonds, and other securities are traded
between two parties. These markets are the basis of capitalist
societies, and they provide capital formation and liquidity for
businesses. They can be physical or virtual.
The financial market includes the stock market or
exchanges such as the New York Stock Exchange,
Nasdaq, the LSE, and the TMX Group. Other kinds of
financial markets include the bond market and the
foreign exchange market, where people trade
currencies.
 BLACK MARKET
-refers to an illegal market where transactions occur without
the knowledge of the government or other regulatory agencies.
Many black markets exist in order to circumvent existing tax
laws. This is why many involve cash-only transactions or other
forms of currency, making them harder to track.
 AUCTION MARKET
An auction market brings many people together for the sale and
purchase of specific lots of goods. The buyers or bidders try to top
each other for the purchase price. The items up for sale end up
going to the highest bidder.
The most common auction markets involve livestock and homes, or
websites like eBay where bidders may bid anonymously to win
auctions.
 PHYSICAL
MARKET
Is a set up where buyers physically meet the sellers and purchase
the desired merchandise from them in exchange of money.
Shopping malls, department stores, retail stores are examples of
physical markets.
 NON-PHYSICAL MARKET/ VIRTUAL MARKET

A nonphysical and borderless spatial dimension that exists in the

digital domain, in which exchange relations and transactions take
place at different levels through digital interactions supported by
communication technologies. Also understood as an umbrella
term for e-commerce.
 KNOWLEDGE MARKET
A Knowledge Market is a meeting to match up people who need
learning, with people who can provide their learning. Knowledge
Markets are commonly used within Communities of Practice.
Purpose. The purpose of a Knowledge Market is to connect
people who have problems with those that can potentially solve
the problems.
The foreign exchange market (Forex, FX, orcurrency market) is a global
decentralized or over-the-counter (OTC) market for
the tradingof currencies. This market determines foreign
exchange rates for every currency. It includes all aspects of buying,
selling and exchangingcurrencies at current or determined prices.
Prediction markets are exchange-traded markets created for the
purpose of trading the outcome of events. The market prices
can indicate what the crowd thinks the probability of the event
is. A prediction market contract trades between 0 and 100%. It
is a binary option that will expire at the price of 0 or
100%. Wikipedia
The Commodities Market is where companies offset their futures risks when
buying or selling natural resources. Since the prices of things like oil, corn, and
gold are so volatile, companies can lock in a known price today. Since these
exchanges are public, many investors also trade in commodities for profit only.
They have no intention of purchasing large quantities of pork bellies, for example

Oil is the most important commodity in the U.S. economy. It is used for
transportation, industrial products, plastics, heating, and electricity generation.
When oil prices rise, you'll see the effect in gas prices about a week later. If oil an
gas prices stay high, you'll see the impact on food prices in about six weeks.