The market system is a rather complex formation, so there are several criteria for distinguishing its structural elements.
Most often, the criterion of the object of market relations is used to classify market structures. Hence, the objects of market relations are consumer goods and services, means of production, etc. Accordingly, the objects of market relations are distinguished by the following types of market: commodity, financial and labor market.
1) The commodity market includes the consumer market (the market of consumer goods and services), means of production, information, intellectual product (scientific and technical developments ).
The consumer market includes markets for food and non-food products; household, utilities, transport services; cultural and educational services; housing; buildings, non-production structures. The goal of the consumer market is to achieve a balance between demand and its commodity coverage.
The market of means of production consists of a market of industrial buildings and structures; the tool market; market of raw materials, materials, energy and other types of industrial products; mineral market. Under the command-administrative system, resources were routinely distributed according to centrally approved standards based on the attachment of producers and consumers to each other. Such a system cannot be peculiar to the market, because it does not ensure the free choice of the consumer of its counterparties, the presence of horizontal ties between economic entities, and the economic competition of producers.
In the context of the increasing involvement of scientific and technological achievements in the production process, the growing internationalization of production, the importance of the information market and scientific and technical developments is increasing immeasurably. Its components are the market of innovations, inventions; market of information product (sphere of information services); market of the product of creative labor (books, films, etc.). The market of scientific and technical developments is the interaction of small firms, innovative banks, leasing offices, research institutes, research and production associations. The need for a more complete study and accelerated processing of the volumes of scientific and technical information accumulated every year led to the creation of national and international specialized information banks, the intensive development of licensed trade. One of the factors of dynamic economic development of some countries was the successful use of purchased licenses, know-how.
2) The financial market includes the capital market (investment market), the credit market, the securities market, the foreign exchange and money market.
The capital market (investment market) involves the purchase and sale of investments. Investment (capital investment in production factors or in the non-productive sphere) determines the overall growth of the economy. The investment market actively influences other markets and, above all, the consumer market. At the same time, society is always faced with a choice: either to invest most of the investments in the means of production (to invest “in the future”), or in the production of consumer goods (to invest in the “present”). At each time interval, this problem is solved taking into account a number of specific socio-economic, political and other circumstances.
If an enterprise does not have enough of its own funds to acquire the necessary resources, it turns to the loan capital market (credit market), where various means of payment (money, securities) can be offered. The loan is granted for a certain fee in the form of interest for the loan and for a certain period.
Securities market. Securities are, as a rule, the credit and debt obligations of the seller of securities before the buyer. They are represented by stocks, bonds, bills of exchange, options, warrants, futures contracts, etc. The main type of securities are stocks and bonds, all the rest are derivatives of them.
Share is a security that indicates the contribution of a certain share in the share capital of the company and entitles its owner to receive income (dividend) and participate in the management of a joint-stock company. Shares are simple (ordinary) and preferred (preferential), registered and bearer. Holders of ordinary shares are not guaranteed a fixed dividend, its value depends on the amount of profit received. The owner of a simple share has the right to vote at a meeting of shareholders. A preferred share does not give such a right, but it provides a fixed income from the company’s profits. If the latter is not enough, then the payment of dividends on preferred shares is made from the reserve fund. In addition, when the company is liquidated, the holder of a preferred share receives a part of the proceeds from the sale of property as a matter of priority.
A registered share is a security registered in the company’s books in the name of the holder. Can be sold to another person only with the permission of the owner. The movement of such shares is recorded in special books. Bearer shares do not mention the name of their holders.
Shares are sold and bought not at par (indicated by its value on the shares), but at the share price. The latter depends on many factors and, above all, on the size of the dividend, the financial and economic situation of this company, the state of the loan capital market, the economic situation in the national, regional and world markets.
In the CIS countries, shares of labor collectives and shares of enterprises are also issued. The first are distributed only among employees of their enterprise, the second – among other enterprises and organizations. Both do not provide for the right of their holders to participate in the management of the enterprise.
A bond is a bearer security that certifies the deposit of a certain amount of money and entitles its holder to receive a fixed income in the form of interest for the period until the redemption of this bond. There are the following types of bonds: registered bearer, interest-bearing, interest-free (target), winning, freely circulating or with a limited circulation. They are issued by the state and joint-stock companies. In the CIS countries, since 1990, bonds have also been issued by joint-stock companies with a constant transition to their free purchase and sale.
A promissory note is a written debt obligation that gives its holder the right, at the end of the term, to demand from the debtor the payment of the amount of money indicated on the promissory note. A distinction is made between promissory notes and bills of exchange. A bill of exchange (draft) is issued and signed by the creditor (tracer) and is an instruction to the debtor (tracer) to pay the designated amount to a third party (remittent) within the specified period.
An option is a written agreement, a document that allows an individual to buy or sell any valuables for a certain period of time at a stipulated price. For example, a manufacturer who purchases a seller’s option receives a guarantee that he will be able to sell his products not lower than the price level specified in the document. Usually, options are issued for a period of 30 days to one year.
A warrant is an option that gives the right to purchase a certain amount of securities at the price fixed in the option. Usually, warrants are issued together with the issue of bonds and preferred shares.
Treasury obligations of the state are a type of government securities placed on a voluntary basis among the population, certifying the contribution of funds by their holders to the budget and giving the right to receive a fixed income during the entire period of ownership of these securities.
There are also so-called convertible securities – these are preferred shares or bonds that can be turned into ordinary shares.
The securities market consists of the primary and secondary markets. In the primary market, government bonds are issued, as well as shares and bonds, which are issued by various joint-stock companies, both financial and non-financial. The secondary securities market is a non-centralized or centralized (stock exchange) purchase and sale of issued securities.
The securities market is directly related to the credit market through the interrelated activities of stock exchanges and banks. Buying and selling significant masses of securities, varying the rate of interest, the state is able to exert an effective influence on the movement of the money supply, on the state of consumer demand and demand for monetary capital and, as a result, on the course of the economic cycle.
The system of relations for the purchase and sale of foreign currencies and payment documents in foreign currencies, all banknotes at free market prices is expressed by the concept of a currency and money market. Through convertible currencies, international monetary settlements related to foreign trade, capital flows, tourism, etc. According to their regime, foreign exchange markets are divided into free (in those countries where there are no currency restrictions) and with certain restrictions (where currency transactions are carried out by authorized state bodies at official rates). A large volume of currency transactions is also carried out by exchange offices, auctions, currency exchanges.
The securities market is quite tightly controlled and regulated by the state. The purpose of such control is to ensure a complete and truthful disclosure of all factors relating to the release of securities for free sale. Until the government is satisfied that the documentation received from the seller of securities is complete, true and understandable, the sale of securities to the public is considered illegal.
3) The labor market is a socio-economic form of movement of labor resources, in which labor power is treated as a commodity, i.e. sold and bought in accordance with the laws of a market economy. The formation of this market involves the implementation of a number of conditions as prerequisites. First, the necessary conditions must be created for the freedom of supply of labor, i.e. for a voluntary choice between employment and unemployment in social production, a free choice of the type of activity. Secondly, the employer must have a real right to hire and dismiss employees, of course, within the framework of labor legislation. Thirdly, all restrictions on the movement of wages and other legal income should be lifted, with the official establishment of a guaranteed minimum.
According to the degree of maturity of market relations, developed and emerging markets are distinguished. The system of markets of Belarus and CIS countries is in the process of formation. The creation of a market economic system involves the elimination of distortions of existing markets and the formation of new markets, for example, such as land and housing markets.
According to the territorial parameters, the following markets are distinguished: local, regional, national and world. A local market is a market on a local scale. The regional market covers a certain territory within the country. The national market is the totality of all the markets of the country. The interaction of different national markets forms the world market.
In relation to the current legislation, a distinction is made between legal (official) and “shadow” markets. The latter is a system of commodity exchange operations prohibited by law. The “shadow” market can be significantly weakened as a result of economic reform aimed at the formation of a legal market. This is evidenced by world experience.
According to the mechanism of functioning, markets of perfect and imperfect competition are distinguished. The market of perfect competition, or the free market, is a self-regulating system of market relations. Each subject of this market cannot influence the price of the object of purchase and sale: it is the result of their interaction.
Markets of imperfect competition include monopolized and regulated markets. In a monopolized market, the monopolist (producer or consumer), by virtue of his monopoly position, has a significant impact on the price of the object of purchase and sale. In a regulated market, an important role is played by the State, which exercises price control through appropriate mechanisms.
According to the level of saturation with goods, an equilibrium, scarce and surplus market is distinguished. In the equilibrium market, demand is approximately equal to supply, in a deficit market, demand exceeds supply. A surplus market is characterized by an excess of supply over demand.