Market system

A market system (or market ecosystem) is any systematic process enabling many market players to bid and ask: helping bidders and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualification, credentials, reputations and clearing that surrounds that mechanism and makes it operate in a social context. Some authors use the term 'market system' to refer to specifically to the free market system. This article focuses on the more general sense of the term according to which there are a variety of different market systems. A market system (or market ecosystem) is any systematic process enabling many market players to bid and ask: helping bidders and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualification, credentials, reputations and clearing that surrounds that mechanism and makes it operate in a social context. Some authors use the term 'market system' to refer to specifically to the free market system. This article focuses on the more general sense of the term according to which there are a variety of different market systems. Market systems are different from voting systems. A market system relies on buyers and sellers being constantly involved and unequally enabled; in a voting system, candidates seek the support of voters on a less regular basis. In addition (a) buyers make decisions on their own behalves, whereas voters make decisions for collectives, (b) voters are usually fully aware of their participation in social decision-making, whereas buyers are often unaware of the secondary repercussions of their acts, (c) responsibility for making purchasing decisions is concentrated on the individual buyer, whereas responsibility for making collective decisions is divided, (d) different buying decisions at the same time are made under conditions of scarcity --- the selection of one thing precludes the selection of another, whereas different voting decisions are not --- one can vote for a president and a judge in the same election without one vote precluding the other, and (e) under ordinary conditions, a buyer is choosing to buy an actual good and is therefore never overruled in his choice, whereas it is the nature of voting that the voter is choosing among potential alternatives and may be overruled by other voters. However, the interactions between market and voting systems are an important aspect of political economy, and some argue they are hard to differentiate; for example, systems like cumulative voting and runoff voting involve a degree of market-like bargaining and trade-off, rather than simple statements of choice. In economics, market forms are studied. These look at the impacts of a particular form on larger markets, rather than technical characteristics of how bidders and sellers interact. Heavy reliance on many interacting market systems and different forms of markets is a feature of capitalism, and advocates of socialism often criticize markets and aim to substitute markets with economic planning to varying degrees. Competition is the regulatory mechanism of the market system. This article does not discuss the political impact of any particular system nor applications of a particular mechanism to any particular problem in real life. For more on specific types of real-life markets, see commodity markets, insurance markets, bond markets, energy markets, flea markets, debt markets, stock markets, online auctions, media exchange markets, real estate market, each of which is explained in its own article with features of its application, referring to market systems as such if needed. One of the most important characteristics of a market economy, also called a free enterprise economy, is the role of a limited government .