Originally, the term market designated a physical place where products
were bought and sold. We still use the term this way to describe such
places as Granville Island Market in Vancouver, Kensington Market in
Toronto, or Jean Talon Market in Montreal. Once developed, however,
theories of market behaviour were easily extended to cover products,
such as wheat or oil, that can be purchased anywhere in the world at a
price that tends to be uniform the world over. Today we can also buy and
sell most consumer products in markets that exist online. The idea that a
market must be a single geographic location where consumers can go to
buy something became obsolete long ago.
For present purposes, a market may be defined as existing in any
situation (such as a physical place or an electronic medium) in which
buyers and sellers negotiate the exchange of goods or services.
Individual markets differ in the degree of competition among the various
buyers and sellers. In the next few chapters we will examine markets in
which the number of buyers and sellers is sufficiently large that no one of
them has any appreciable influence on the market price. This is a rough
definition of what economists call perfectly competitive markets. Starting in
Chapter 10 , we will consider the behaviour of markets in which there
are small numbers of either sellers or buyers. But our initial theory of
markets, based on the interaction of demand and supply, will be a very
good description of the markets for such things as wheat, pork,
newsprint, coffee, copper, oil, and many other commodities.