This chapter explains what a market is in economics, how markets are classified, and the main market structures – monopoly, monopolistic competition and oligopoly. It then explains who a consumer is, what unfair trade practices are, the eight basic consumer rights, the Consumer Protection Act, 1986 (COPRA), the three levels of consumer courts and the highlights of the Consumer Protection Act of 2019.
1. What Is a Market?
- In the traditional sense, a market is where buyers and sellers meet to exchange their goods and services.
- In economics, a market is not a physical place. Economists describe a market as the coming together of buyers and sellers – an arrangement where buyers and sellers come in direct or indirect contact to sell or buy goods and services. For example, the market for books is made up of all the sellers and buyers of books in an economy.
- Definition: A set up where two or more parties are engaged in exchange of goods, services and information is called a market.
- The two parties in a transaction are the seller and the buyer. The seller sells goods and services to the buyer in exchange for money.
- There has to be more than one buyer and seller for the market to be competitive.