What is a Market
... A market is the collection of buyers and sellers that, through their actual or potential interactions, determine the price of a product or set of products. In the market for personal computers, for example, the buyers are business firms, households, and students; the sellers are Compaq, IBM, Dell, Gateway, and a number of other firms. Note that a market includes more than an industry. ... In effect, an industry is the supply side of the market. Economists are often concerned with market definition: which buyers and sellers should be included in a particular market. When defining a market, potential interactions of buyers and sellers can be just as important as actual ones. An example of this is the market for gold. ... It is precisely this possibility of arbitrage which prevents the prices of gold in New York and Zurich from differing significantly and which creates a world market for gold. ... As we saw, market definition identifies which buyers and sellers should be included in a given market. However, to determine which buyers and sellers to include, we must first determine the extent of the market. The extent of a market refers to its boundaries, both geographically and in terms of the range of products to be included in it.