Markets are systems where parties exchange goods and services. They can be physical or virtual. Usually, markets involve the use of money to conduct transactions.
Critics of markets have pointed out that they have a tendency to lead to inequality. Some markets are competitive and others are monopolistic. In a market where there are a few competitors, each seller has a large amount of control over the price and attributes of the product he sells.
Markets are designed to facilitate trade and innovation. They allow people to evaluate their preferences and trade those preferences for things that are more easily available. This allows them to better utilize their resources and thereby raise the standard of living.
Markets provide capital for new inventions and entrepreneurs. They enable individuals to test new techniques and discover new combinations of factors of production. Various kinds of markets exist, from markets for public goods to markets for private goods.
Economists generally see markets as a positive force. They typically agree that a market can be an effective way to distribute resources within a society. However, they also recognize that markets can fail. Unlike other institutional solutions, the size of a market is not fixed.
Economists have long employed abstract models to analyze markets. These models are idealizing, and do not capture the real-life effects of these institutions.
Markets are complex. For instance, a market for cigarettes might be a black market. And a market for a knowledge-based good might be a knowledge market.
