The essence and existence conditions of the market

In general terms, the market can be defined as a spontaneous order. Given that brief definition is impossible to cover all the facets of this important economic category, it can be said that the market - it is a way of interaction of producers and consumers, based on a decentralized, impersonal mechanism of price signals.

In a study forms of market economy relations cover the entire system and all the economic actors. Market participants are both entrepreneurs and workers who sell their labor, and the end users and the owners of the loan capital, the owners of the securities, etc.

The main actors of the market economy can be subdivided into three groups: households, businesses (entrepreneurs) and the government. In the "Macroeconomics", when we take into account the international economic relations, will be the subject of analysis and another entity of the market - abroad.

Household - basic structural unit, which operates in the consumer area of ​​the economy. It may consist of one or more persons. In the household consumed the final products of material production and services sectors Households are the owners and suppliers of factors of production in a market economy. Received from the sale of services of labor, capital and other factors of production is money well spent to meet personal needs (and not for the profit increase).

Business - it is a business enterprise, operates a chain of income (profit). It involves investing in the depot's own or borrowed capital, the income from which is used not just for personal consumption, and for the expansion of production activities. Business is a supplier of goods and services in a market economy.

The government is represented mainly by the various budget organizations, which are not intended to make a profit, and realize the functions of state regulation of the economy.

One and the same person (adult member of society) can be part of and household and business, and government agencies. For example, working on a self-employed civil servant, you are the representative of a government organization, owning securities of a corporation, you represent a business, spending their income to personal consumption, you are a member of the household. Accordingly, the modern market economy - is a system of markets, goods and labor services, loan capital, securities, foreign exchange, etc.

The most important conditions of a market are the social division of labor and specialization.

The first of these categories is that any more or less large community of people none of the farms are not able to live at the expense of complete self all the productive resources of all economic benefits.

Different groups of producers engaged in certain types of economic activity. This means specialization in the production of certain goods and services. Specialization in turn, is determined by the principle of comparative advantage, ie, the ability to produce products at a relatively lower cost alternative. Comparative advantage is one of the central concepts in economics Manufacturers have different skills, abilities, variously provided with limited resources.

Condition for the emergence of the market is the so-called economic isolation or economic autonomy of market. After exchanging goods that were created on the basis of the social division of labor and specialization, fully independent, self-sufficient in making economic decisions makers. The economic autonomy means that only the manufacturer decides what to produce, how to produce, to whom and where to sell products created. Adequate legal regime of economic isolation is a private property regime.

For the emergence of the market of a product is important and the magnitude of transaction costs. Let's say you decide to baking cakes at home with a view to their subsequent sale in the busiest spots in your city. However, you must obtain permission sanepidemstantsii on such activities, a license from the municipality, etc. If all of these transaction costs for those wishing to start producing cakes for sale, according to preliminary calculations, the income will be higher than expected, the market and cakes will be created. Thus, transaction costs determine the conditions and limits of market activity.

Finally, an important condition for the emergence of the market is the free exchange of resources. After all, the social division of labor, specialization and exchange can exist in a hierarchical system where the center determines who and what to produce, to whom and with whom to share the output.

Only the free exchange of existing in spontaneous (natural) way that allows it to form free prices, which will be economic agents suggest the most effective

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