Meaning of Market: In ordinary language the term Markets means a place or locality where commodities are bought and sold. But in Economics this term has a special meaning. Before discussing the classification of market, we should know what the market is. In Economics it refers to a commodity which is being bought and sold. In Economics place has no significance. The buyers and sellers may not reside at a particular place. Telephone, Telegrams, Stock exchanges, Merchant guilds etc., are the means which bring co-ordination between buyers and sellers. Hence in Economics, the term ‘Market’ means a locality, a town or a country or the entire world.
Definition of Market: According to Benham “Market refers to the arrangement where by sellers and buyers come in close touch with each other directly or indirectly so that the prices obtained in one part of the market affect prices paid in another market“. Characteristics And Classification Of Market are discussed below:
Characteristics of Market :
The following are some of the important characteristics of Market :
1) Buyers and Sellers : Market always refers to the-presence of buyers and sellers. Buyers without sellers or sellers without buyers cannot form a market.
 2) Contacts between buyers and Sellers : Mere presence of buyers and sellers can’t be called as a market. The buyers and sellers must have contacts regarding the prices, supply and demand of different goods.
3) Same Commodity: Transaction’s between buyers and sellers take place only when,there exists the same Commodity.
4) Price : The value of commodities or services in a Market is expressed in terms of money prices. The supply and demand for a commodity and service may vary according to the changes in their prices.
Classification of Market :
On the basis of area, competition and time, Markets are classified into several types.
A. Classification of Market according to the extent of area:
On the basis of the extent of area, markets are classified into three types namely 1) Local market 2) National Market and 3) International Market.
1. Local Market: Local market refers to the transactions between buyers and sellers of a particular area. In a local market the demand and supply conditions influence the price of different goods. Normally perishable goods like milk, eggs, curd, ghee, flowers etc. will have local market.
2. National Market: Commodities like rice, Wheat, Maize etc,. have national market. These commodities have demand throughout the country.
3. International Market : Commodities which are supplied and demanded all over the world have international market. Gold, Silver, Cotton, Wheat, Diamonds etc, have this type of market.
B. Classification of Market on the basis of competition:
On the basis of competition markets are classified into two types namely 1) Perfect Market  2) Imperfect Market.
1) Perfect Market: In a perfect market we observe large numbers of buyers and sellers. There prevails homogeneous goods, uniform price and complete price knowledge by consumers and producers. Factors of production are freely mobile from one industry to the other for securing maximum remuneration for their services. No single buyer or seller influences the price of a commodity.
2) Imperfect Market: In an imperfect market, there exists a single seller or producer without any rival producers or buyers. He enjoys control over the price of his commodity. He can decide either the price or quantity of his commodity. He earns normal profits. He charges different prices for the same commodity.
C. Classification of Market according to time :
On the basis of time, markets are classified into two types namely- 1) Short period market and 2) Long period market. This classification is made on the basis of changes in demand and supply of commodities.
1) Short period market: If the new firms find it difficult to enter into the industry or if the old firms find it difficult to leave the industry, such period is known as short period. During this period, the demand conditions have great influence over the market. When deman for a goods increases during this period, a firm can increase its supply by changing the variable costs of production.
2) Long period market: As against this if the firms in an industry have enough time either to enter into or exit out of the industry, such markets are called long period market. In a long period market the prices of goods and services are influenced by both the demand and supply factors. During this period, the firms can increase output by introducing new techniques and latest machinery. Long period market price is always equal to the average costs. During this period firms get normal profits.
