Conditions of occurrence of the market

The characteristic feature that determines the market is its spontaneous order. This phenomenon can be given the following brief definition. The market is a means of interaction between producers and consumers, based on the mechanism of price indicators that is devoid of the center. All participants in economic relations enter into market relations. These are entrepreneurs, and those workers who sell their own labor, and organizations and persons issuing loans, owning securities, etc. Usually, three groups of participants in the market economy are singled out: the government, entrepreneurs (business) and household.

The government is represented by numerous budgetary organizations that function to regulate the economy; Business - business enterprises working for the purpose of generating income; And the household is owned.

The basic conditions for the emergence of the market are the social division of labor and narrow specialization. The first category means that no one can provide for himself fully all the benefits of the economy and the resources of production. Each type of economic activity has its own group of producers. This is the specialization in the manufacture and provision of various services and benefits. It determines its ability to produce more services at an alternative, lower price. This is called the principle of comparative advantage in economic theory and is the basic concept in it.

The market and the conditions for its emergence also depend on the economic independence of its participants. Based on the social division of labor and specialization, goods and services are created and provided by completely separate producers. They independently decide what products to deal with, how to produce it, find their own sales for their goods. Such economic independence can be fully realized under the current regime of private property.

After all, the emergence of the market of any product is impossible without the existence in society of such a set of norms that determines the rights of participants in economic relations. For example, if the owner of the land is not sure that he can not at any time take away either her or the income received, will he grow wheat to later exchange? If it becomes under pressure, it will be an entirely different form of economic relations, the conditions for the emergence of a market are destroyed. After all, it can exist only for the products for which it is possible to establish, implement and transfer property rights.

The size of transaction costs is also important . Without such a condition for the emergence of a commodity market, it is impossible to imagine modern economic relations. For example, someone decided to bake their own homemade bread in order to realize it at different points in their city. However, if he does not calculate in advance, how much money will go to obtain permission for sale from the city authorities, conclusions from the sanitary epidemiological station, deductions to racketeers, then the expenditure may ultimately exceed income, and the bread market will not be created. Thus, the boundaries and conditions of the market are determined by transaction costs.

Finally, market relations are impossible without such a condition for the emergence of the market, as the exchange of resources on a free basis. Specialization, exchange and social division of labor can also be represented in the form of a hierarchical system, when the center will receive instructions, to whom to produce products, which, with whom and under what conditions it should be exchanged. But free prices can be formed only if there is free exchange. And already prices will tell the participants of the economic process, in which direction their activities should go.