Three Reasons Why Business Markets and Industrial Markets Exist

A market is a collection of human arrangements, processes, infrastructures or systems through which different parties engage in trade. In simple terms it can be defined as an exchange of commodities between persons. The definition of a market has also been used to define different economic activities. These activities are categorized into three main categories, namely, consumption, production and distribution. While production and distribution refer to the process of producing and distributing products, consumption refers to the process of obtaining and using goods.

Markets

Some of the most common uses of the term market relate to financial markets, for example, stock markets and commodity markets. The financial market refers to those that involve banks and other financial institutions. Examples include the repo market and the foreign exchange market. Other examples include the credit markets and the bond markets.

Financial markets can either be black or white markets. The existence of a financial market or a gray market is determined by the existence of a third party, such as a broker. The presence of brokers in the financial market ensures that only two parties actually have access to the information being exchanged.

One of the reasons as to why many black markets exist exists relates to the lack of public access. Private information is not available to the general public. Private data is not viewable on the internet and so such information is not available to many buyers. This means that buyers in many cases need to work with agents to get the information they require.

The second reason as to why business markets and industrial markets exist relates to the specialization of goods and services. Many businesses and industrial sectors specialize in particular goods or services that make them distinct from other producers and traders. This makes them special markets that are not open to general trading.

The third reason as to why business markets and industrial markets exist is that many buyers live within specific geographical areas. A buyer living in the East coast of the United States would be unable to purchase items produced in Japan because of the high price of the items produced in Japan. However, a buyer in the South-west would also be unable to purchase items produced in the UK because of the high price of items produced in the UK. These geographic factors mean that buyers from specific areas can be excluded from the production process unless a specific agreement exists.

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