Today, the concepts of "market" and "market economy" are perhaps one of the most common economic categories. And it is not surprising, because, as world experience shows, this is the most effective form of organizing the economic life of society.
What is the market
The history of this concept has deep roots. The market originated during the formation of primitive society, when exchange between communities became regular, acquired the form of commodity barter and began to be carried out at a certain time in a certain place. Crafts and cities developed, trade expanded and certain places (trade areas) began to be assigned to markets. This definition of the market has survived to this day, but only as one of its meanings.
In modern economic theory, the concept of the market has expanded to understand it as an element of reproduction of the aggregate social product. From this point of view, the market is a rather complex formation, which, on the one hand, is a sphere of exchange and a set of purchase and sale transactions, and on the other hand, it provides the relationship between the manufacturer and the end consumer, that is, the continuity of the reproductive process, its integrity.
Market formation conditions
In order for market mechanisms to work well for the development of an efficient economy, it is necessary to achieve a combination of several factors.
1. The independence of business entities and economic freedom. This implies the right of each entrepreneur to independently choose the type of activity, decide what to produce or what services to provide, at what price and where to sell them, with whom to cooperate.
2. The presence of various forms of ownership (polyformism), which makes it possible to identify the strengths and weaknesses of each of them, to characterize them and, on the basis of this, to choose the most effective form of economic activity.
3. A sufficient number of producers of the same type of products (at least 15) to avoid oligopolies (4-5 producers) and monopolies (1-2 producers).
4. The existence of healthy competition, which forces entrepreneurs to look for ways to optimize the production process and increase labor productivity, introduce new techniques and technologies, cut costs, increase the volume of finished products or services provided, and, as a result, improve the efficiency of the economy.
5. Market entities have the right to independently establish the cost of goods (services) and determine their pricing policy depending on fluctuations in supply and demand.
6. Possibility of access of all business entities to complete and real information about the state of the market.
7. Developed market infrastructure - a complex of industries, services, systems that provide conditions for production and general life.
