The market is the totality of all relations, as well as the organization of people’s cooperation with each other, related to the sale of goods and services.

The modern market is a mechanism of interaction between buyers and sellers that has become a system of regulation of economic life, making up the economy.

The market implies the production, exchange, distribution and consumption of products. It supplies the necessary resources and the products, as well as determines the demand for it. It is the main sales and procurement channel for goods and services, the mechanism that determines the size of income for the owners of resources. Finally, the market is the place where the price is determined, which is the main indicator of an economy.

The market, as a mechanism, consists of individual markets - capital, labor, food, housing, insurance services, etc. "Small" markets are of two types: resources and products (goods and services).

Economic agents arise on the "big" market as owners of economic resources (labor, land, capital, entrepreneurial abilities, knowledge). Through appropriate markets, they sell their resources to firms, earning income for it.

Manufacturers use the acquired resources to organize the production of goods, which are then sold on product markets. There, they are acquired by consumers.

Market functions

Market functions are determined by the tasks it faces. The market mechanism is designed to find answers to three key questions: what, how and for whom to produce? 

The pricing function

As a result of the interaction of producers and consumers, supply and demand for goods and services, a price is formed in the market. It reflects the usefulness of the goods and the costs of its production.

The informational function

The price prevailing in each of the markets contains rich information necessary for all participants in economic activity. Constantly changing prices for products and resources provide objective information about the required quantity, assortment, quality of goods delivered to the markets.

The regulatory function

Constant price fluctuations not only inform about the state of affairs, but also regulate economic activity. Rising price - expanding production; price falls - it is reduced. The information provided by the market forces manufacturers to reduce costs and improve product quality.

The mediation function

The market acts as an intermediary between producers and consumers, allowing them to find the most profitable purchase and sale option.

The sanitizing function

 As a result of market selection work, the average level of efficiency rises, and the stability of the national economy as a whole rises.

What is competition?

By the most general definition, competition is the rivalry between market participants. The advantage of competition is that it makes the distribution of limited resources dependent on the economic arguments of the competitors. You can usually win the competition by offering goods (economic resources and products) of higher quality or at a lower price.

Therefore, the role of competition lies in the fact that it contributes to the establishment of a certain order in the market, which guarantees the production of a sufficient amount of high-quality goods sold at an equilibrium price.

Pure competition arises under the following conditions:

• many small firms offer homogeneous products on the market, while the consumer does not care from which company he purchases these products;

• the share of each company in the total market supply of these products is so small that any decision to raise or lower the price does not affect the price of the market equilibrium;

• the entry of new firms into the industry does not encounter any obstacles or restrictions; entrance and exit from the industry is absolutely free;

• there are no restrictions on the access of a particular company to information on the state of the market, prices of goods and resources, costs, quality of goods, production techniques, etc.

Any competition which, to one degree or another, is associated with a marked limitation of free enterprise, is called imperfect.