Lec-02 Market Meaning and Definitions, Components of A Market and Classification

Agricultural Marketing, Trade & Prices
Topic: Market: Meaning & Definitions, Components of a

Market and Classification
By: Prof. Vikesh Rami

Market
A market is the areas within

which the forces of demand and
supply converge to establish a
single price.
Classification of markets
1. On the basis of location:
1) Village markets: A market which is located in a small
village, where major transactions take place among the
buyers and sellers of a village, is called a village market.
Cont…
2) Primary wholesale markets: These markets are located
in big towns near the production centers. In these markets, a
major part of the produce is brought for sale by the farmers
themselves. Transaction in these markets usually takes place
between the farmers and traders.
Cont….
3) Secondary wholesales markets: these markets are located
generally at district headquarters or important trade centre of
near railway junction. The major transactions in commodities
take place between the village traders and wholesalers or
between wholesaler’s retailers. The bulk of the arrivals in these
markets is from other markets. The produced is handled in large
quantities and specialized operations become necessary for the
performance of different services viz. storage, handling and
banking. Etc.
Cont….
4) Terminal markets: A terminal market is one where the
produce is either finally disposed off to the consumers or
processors, or assembled for export. Merchants are well
organized and use modern methods of marketing. Such
markets are usually at the ports, which posses sufficient
warehousing and storage facilities and cover a very wide area
extending over even a state or two.
Cont….
5) Seaboard markets: which are located near the seashore
and are meant mainly for the import/export of goods is
known as seaboard markets. E.g. Bombay, Madras, Calcutta.
Cont…
2. On the basis of area/coverage:-
On the basis of the area from which buyers and sellers
usually come for transactions, market may be classified as.
1. Local or village markets: Buying and selling among the

buyers and sellers are done from the same village or nearby
villages. They exist mostly for perishable commodities in
small lots e.g. local milk market, vegetable market.
2. Regional markets: A market in which buyers and sellers

for a commodity are drawn from a larger area than the local
markets. Regional markets in India usually exist for food
grains.
Cont…
3. National markets: A market in which buyers and sellers
are at the national level. National markets are found for
durable goods like jute and tea.
Cont…
4. World markets: A market in which the buyers and sellers
are drawn from the whole world. These markets exist in the
commodities which have a world wide demand and / or
supply, such as coffee, agril. Machinery, Gold etc.
Cont….
3. On the basis of time:
1) Short period markets: These are held only for a few
hours. The products dealt in these markets are of a highly
perishable nature, such as fish, vegetables, and milk. In these
markets, the prices of commodities are governed by the
extent of demand, rather than by the supply of the
commodity.
Cont…
2) Long period markets: These are held for a longer period
than the short period market; the commodities traded in
these markets are less perishable and can be stored for some
time. E.g. food grains and oilseeds.
Cont…..
3) Secular markets: These are markets of a permanent
nature. The commodities trades are durable in nature and can
be stored for many years. E.g. agril. Machinery, fertilizer etc.
Cont…
4. On the basis of volume of transactions:
a) Wholesale markets: A wholesale market is one which

commodities are bought and sole in large lots or in bulk.
Transaction in these markets is take place mainly between
traders.
b) Retail Markets: A retail market is one in which

commodities are bought by and sold to the consumers as per
their requirements. Transactions take place between retailers
and consumers. The retailer purchase in wholesale markets
and sell in small lots to the consumers. They are near to the
consumers.
Cont…
5. On the basis of nature of transaction:
1) Spots or cash markets: A market in which goods are

exchanged for money immediately after the sale.
2) Forward markets: A market in which the purchase and

sale of a commodity takes place at time but the exchange of
the commodity take place on some specified date in future.
Sometimes the difference in the purchase and sale prices are
paid or taken. E.g. groundnut oil market.
Cont…
6. On the basis of number of commodities in which
transaction takes place:
1) General market: A market in which all types of

commodities, such as food grains, oilseeds, fiber crops. Are
bought and sold is known as general markets.
2) Specialized markets: For every group of commodities,

separate markets exist. The examples are food grain markets,
vegetable markets, wool market, and cotton market.
Cont…
7. On the basis of degree of competition:
1) Perfect markets:
 There are a large number of buyers and sellers.
 All the buyers and sellers in the market have perfect knowledge
of demand, supply and prices.
 Prices at any one time are uniform over an area + or - the cost
of transportation.
 The prices of different forms of a product are uniform + or - the
cost of processing.
Cont…
(2) Imperfect competition:
• A market is said to be imperfect when some buyers or
sellers or both are not aware of the offer being made by
others. Therefore different prices prevail for the same
commodity at the same time in a imperfect market
• Imperfect competition is of three forms

(a) Monopolistic competition
(b) Oligopoly
(c) Monopoly
Cont…
(a) Monopolistic competition :
• When a large number of sellers deal in heterogeneous and
differentiated form of a commodity, the situation is called
monopolistic competition.
Main features:
 No. of sellers are not large
 Products are heterogeneous – different branded tractor.
 Either in ignorance or on account of transports cost or lack of
mobility of the factors of production, same price does not rule.
 Price curve is not a horizontal.
 Demand for the product is not perfectly elastic; it is responsive to
changes in price. The products are not complete substitutes for
one another, but they are close substitutes.
Cont…
(b) Oligopoly: (Perfect oligopoly & Imperfect oligopoly)
A market in which there are more than two but still a few
sellers of a commodity is termed as an oligopoly market. A
market having a few (more than two) buyers is known as
oligopsony market.
E. g.-Toothpaste producers
• In perfect oligopoly homogenous commodity.
• In imperfect oligopoly commodity is heterogeneous.

Cont…
(c) Monopoly:
• Monopoly is a market situation in which there is only one seller of
a commodity. The price of a commodity is generally higher than in
other markets.
• Indian farmers operate in monopoly market when purchasing

electricity for irrigation. When there is only one buyer of a
product the market is termed as a monopsony market.
• There are no substitutes for his product. He controls the entire

supply and he can fix the price. In monopoly, there is no need to
differentiable products because no close substitutes are available
Cont…
2) Imperfect markets: The markets in which the conditions
of perfect competition lacking are known as imperfect
markets. They may be
a) Monopoly market:
A market situation in which there is only one seller of a
commodity. He has sole control over the supply or price of a
commodity. The price of commodity is generally higher than
in other markets. Indian farmers operate in monopoly
market when purchasing electricity for irrigation. When
there is only one buyer it is termed as a monopsony market.
Cont…
a) Duopoly market: A duopoly market is one which has only

two sellers of commodity. They mutually agree to charge a
common price which is higher than the price in a perfect
market. eg. fertilizer companies
b) Oligopoly market: A market in which there are more than
two but still a few sellers of a commodity is termed as
oligopoly market. eg. insecticide/pesticide companies
c) Monopolistic competition: When a large number of sellers
deal in heterogeneous and differentiated form of a
commodity, it is called monopolistic market. The difference
is made conspicuous by different trade marks on the
product. Different prices prevail for the same basic product.
For example farmers have to choose between various makes
of insecticides, fertilizers and equipment's.
Cont…
8. On the basis of extent of public intervention:
1) Regulated markets: Markets in which business is done in

accordance with the rules and regulation framed market
organization and represent different sections involved in
markets. The marketing costs in such markets are
standardized and practices are regulated.
2) Unregulated markets: These are the markets in which

business is conducted without any set rules and regulations.
Traders frame the rules for the conduct of the business and
run the market. These markets suffer from many ills, such as
unauthorized charge for marketing functions.
Cont…
9. On the basis of visibility:
1) Black market: In black markets, scare commodities are

sold at a very high price not openly but in a secret manner.
Black market is an anti-social activity which gives way to
black money.
THANK YOU

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Agricultural Marketing, Trade & Prices

Topic: Market: Meaning & Definitions, Components of a

By: Prof. Vikesh Rami

A market is the areas within

1. Local or village markets: Buying and selling among the

2. Regional markets: A market in which buyers and sellers

a) Wholesale markets: A wholesale market is one which

b) Retail Markets: A retail market is one in which

1) Spots or cash markets: A market in which goods are

2) Forward markets: A market in which the purchase and

1) General market: A market in which all types of

2) Specialized markets: For every group of commodities,

• Imperfect competition is of three forms

• In perfect oligopoly homogenous commodity.

• In imperfect oligopoly commodity is heterogeneous.

• Indian farmers operate in monopoly market when purchasing

• There are no substitutes for his product. He controls the entire

a) Duopoly market: A duopoly market is one which has only

1) Regulated markets: Markets in which business is done in

2) Unregulated markets: These are the markets in which

9. On the basis of visibility:

1) Black market: In black markets, scare commodities are

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