market - exchange center, central economic unit

• place where buyers/sellers come together to exchange product/good
  • retail market - buyers = consumers, sellers = retail stores
  • wholesale markets - buyers = retail stores, sellers = goods producers
  • factor markets - buyers = goods producers, sellers = workers/capital suppliers
• contains different range of products w/ different geographies (extent of market)
  • used to find actual/potential competitors
• arbitrage - buying low, selling high in another market
  • determines extent of market, due to significant differences in price
  • complete market (perfectly competitive) - consumers/producers can’t determine/change price
  • impossible in real life
  • large number of buyers/sellers >> hard to influence price
  • competition keeps different markets’ prices even
  • no need for market to pay attention to single consumer
  • no influence from either side on price (fast food is closest real example)
• incomplete market (noncompetitive) - either demand or supply affects price
  • balance between demand and supply
  • not just one decision marker (economic agent), may be based on brand loyalty/price
  • producers influence the price individually (w/ monopoly) or cartel (ie OPEC)
  • oligopoly - sellers combine forces (OPEC, railways, etc)
  • monopoly - only 1 choice, source >> seller has all power
• commodity market - many units of same goods (supermarket)
  • consumers decide how much to buy
• product differentiated markets - buyers purchase fixed number of units
  • units differ in quality, specifications (ie cereal, cars)
  • monopolistic competition - ie Mac vs PC >> specialty brands
  • producers have limited ability to influence price (due to competition from other brands)
  • new/different brands >> competitive force

market operation - live auctions, sealed bids 

• live auctions -
  • sellers starts low, raises price until 1 buyer left
  • seller starts high, lowers until 1st buyer emerges
  • buyers place max price orders (allowance), sellers place minimum price requests
• sealed bids -
  • seller says what’s for sale, buyers submit a single bid >> highest bid wins
  • buyer says what’s needed, buyers submit a single bid >> lowest bid wins
• posted prices - difference prices for different quality
  • compare prices/quality >> look for best trade off
  • unsold units >> seller cuts prices (w/ sales, discounts)