معرفی مختصر مفهوم بازار و شکست بازار

A Brief Introduction to the Concept of Market

Market [3]
1. What is a market?
Scientists have proposed different definitions of market until now (p.9) [1]. For instance, Hodgson (1988) defines market as an institutionalized exchange of a large number of commodities and Cournot (1897) talks about the prices of the same commodities in a market and emphasizes that the prices should tend to equality easily.
In summary, we can say that market is an institutionalized exchange of commodities, which their prices tend to equality simply (if they are of the same commodities).
Property law, contract law and tax law are some of the rules of market (p.10) [1]. There are also different market structures, like perfect competition, monopolistic competition, monopoly and monopsony (p.11) [1].
We can see different types of markets. For example: auction markets, customer markets, black markets, formal and informal markets, thick and thin markets, fragmented markets and segmented markets (p.12) [1].

Auction [4]
2. Why do markets exist?
In [2], Markets can be considered as planned social institutions, which have evolved through time and continue to exist and spread throughout the world (p.179). As mentioned in [1], mainstream economics thinks that markets make it possible for people to be able to buy the productions, which they need instead of producing them. They also talk about that markets can manage the function of transactions. Hodgson says that markets decrease transaction costs (costs of searching and gathering information, costs of bargaining etc.) (p.14).

3. Market failure
Market failure happens when markets do not work in the way that mainstream economics want it to work. Common types of market failures are monopoly (and monopsony), pollution or other forms of externality, public goods, adverse selection and moral hazard [1].
Some examples (p.17):
Monopoly (and monopsony): in 1970s, OPEC decided to decrease the production of oil and because of that decision; the price of oil increased a lot.

Oil [5]
Pollution or other forms of externality: sometimes industrial units make the environment polluted and this results in, for example, death of animals.
Public goods: when a consumer use a good but do not pay for that and at the same time, cannot be excluded from the group of consumers.
Adverse selection and moral hazard: some people drive less carefully when they buy car insurance and that makes problems for insurance suppliers.

References
[1] Sjaastad, Espen. 2021. “What Is a Market?” Norweigen University of Life Sciences, Lecture given 27/09/2021.
[2] Hodgson, Geoffry. 1988. “Markets as Institutions.” Polity Press.

[3] https://pixabay.com/illustrations/ai-generated-stock-market-graph-8490532/

[4] https://pixabay.com/vectors/auction-ring-online-buying-asset-7194967/

[5] https://pixabay.com/vectors/graphic-oil-rig-oil-ocean-3795602/

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