B. Market mechanism and its elements. The essence and function of the market. Market mechanism as a market mechanism functions

Introduction

The market system has a certain internal order and is subject to certain patterns, it is capable of self-regulating and efficiently function.

The market mechanism restores disturbed balance between supply and demand. The market is a self-adjusting system. The market management is ensured using its mechanism. The mechanism of the market in various models of the market is unequal, however, the essence of its one and the same in any market.

Thus, it can be concluded about the relevance of the topic, because in matters of functioning and development of the modern economy, the market mechanism plays one of the main roles.

The object of study in this paper is the market mechanism, the functioning of its component elements.

The subject of the study is the composition and interaction of component elements of the market mechanism.

The main objective of the work is to study the operation of the market mechanism.

The goal determined the tasks of the work:

consideration of the conditions for the formation and functioning of the market;

study of the overall characteristics of the market mechanism, supply and demand, laws of supply and demand, changes in demand and suggestion;

consideration of the basic functions of the price;

studying the interaction of supply and demand, the concepts of market equilibrium.

The theoretical and methodological base of the work was the works of such scientists as E.B. Bahrina, G.S. Perpetuals, I.P. Nikolaev, MA Sazhina and others.

Market mechanism

General characteristics of the market mechanism

Any economic mechanism is a set of elements in their relationship, a combination of economic laws that determine the dynamics of movement of elements of economic mechanisms, as well as the organizational structure of the economic system.

The market mechanism is a mechanism of interconnection and interaction of the main elements of the market: demand, suggestions, prices, competition and major economic laws. These elements are the most important parameters of the market, which are guided by manufacturers and consumers in their economic activity in the market system. This is a rod of market relations, the core of the market.

The market mechanism is valid on the basis of economic laws: changes in demand, supply, equilibrium price, competition, cost (values), utility, profit, etc.

On the production side acts a proposal on the consumption side - demand. These two elements are inextricably linked, although the market is opposed to each other. They can be compared with two forces acting in opposite directions. Depending on the specific conditions of the market, the supply and demand is balanced on a more or less long period. This leveling and demand may occur spikely and under the regulatory influence of the state.

It is important to note that the market mechanism acts as a mechanism forcing, forcing entrepreneurs who pursue their own goal (profit), act ultimately to benefit consumers. For example, unsatisfied demand for fashionable goods increases the price of demand, but does not fully satisfy the need. Producers have an alternative: either expand production and reduce the price and thus satisfy the need for more buyers, or keep a high price until competitors fill this niche in the market and take a clientele, and it is not only superfrior (from high prices ), but profit. This danger encourages the manufacturer to expand production in a timely manner, reduce the price of its goods until the market saturation. Such a mechanism is valid subject to the availability of competitors.

The effect of this mechanism is not based on persuasion, but on the natural desire of a person to welfare. Therefore, to actuate the market mechanism, nothing, except freedom of manufacturers and consumers. The more fully freedom, the more effective there is a mechanism of self-regulating market economy.

The market continues to meet the seller and the buyer who at their own fear and risk make exchange transactions. On the market everyone is afraid to guess, be deceived, incur damages. Everyone wants to sell more expensive, and buy cheaper. The risk is expressed in the fact that the producer seeks to predict the demand, form it and release products at high prices when the market is not yet saturated. At this time, he risks being looked at competitors, invest money in the production of non-prospective goods, produce goods more than the market requires and sell the goods for a snot. Thus, various kinds of conflicts arise in the market, which are resolved using a market mechanism. The economic situation of producers and consumers, sellers and buyers depends on market conditions, which varies under the influence of numerous factors.

Market conjuncture is a combination of economic conditions in the market at every given moment, under which the process of implementing goods and services is carried out.

It is determined by the economic indicators characterizing the state of the market: the ratio of supply and supply, price level, market capacity, solvent consumers' capabilities, inventory states, etc. At the same time, the ratio of demand and suggestions plays an extremely important role, for it is precisely it is often predetermined by the fate of sellers and buyers.

Market conditions should be distinguished from the national economic situation, which is a set of economic conditions and signs that determine the process of public reproduction as a whole and characterizing the overall state of the economy at the moment.

Profit oscillations - market barometer supplying a production signal. The commodity producer in its economic activity is inevitably guided by the interests of profits. Profit depends on prices, growth in the production volume and speed of capital. The nature of the focus of the enterprise is changing in the conditions of a balanced market and the scarce economy, when collective egoism arises and the role of profit in the activities of the enterprise is hypertrophy.

Consider the market mechanism on the example of its ideal - free market. The essence of this mechanism of the same type in any market, but he himself is experiencing a different effect on the part of external factors, which causes the differences in its organizational forms. The mechanism of market functioning can be represented by the following scheme (Fig. 1.1.).

Fig. 1.1. Market functioning mechanism

A source: .

The basis of this mechanism is the mechanism of validity of the law of value. When the demand is equal to the proposal (and this is the ideal state of the market and exists as a temporary phenomenon), the price of goods is set at the level of socially necessary costs and acts as an equilibrium price.

Suppose that the need for product has increased. This means that the demand for such a product increases and begins to be ahead of the proposal. Prices also begin to grow, respectively increases and the rate of profit in this production.

The occuring process attracts additional capital, and, therefore, it becomes possible to involve additional production factors in the production process (manufacturing and labor). The expansion of production allows you to increase the proposal of goods A, and thus the balance between supply and demand is restored, prices begin to decrease and again come to equilibrium prices. Of course, in terms of the real market, not one, but many social and economic factors, but we consider this process to be simplified to obtain an idea of \u200b\u200bthe essence of the market mechanism.

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The economic situation of market entities is influenced by market conditions - the ratio of supply and demand for both individual goods and in the commodity mass in general. When the proposal exceeds the demand, buyers have the opportunity to compare various varieties of goods, their prices and provide preference for one or another product.
.

Such a situation is possible in the buyer market, i.e. In this market, where there is a competition of manufacturers and sellers. If demand exceeds the proposal, there is no competition between manufacturers and sellers, the main role is played by the number of goods and services, and not their quality, then this is the market of the seller. In this market, the product range is poor, there is no pre-sale and after-sales service, everything is sold immediately, with "wheels".

The modern market is the buyer's market. In industrialized countries, the state of the market determines the priority position of consumers of products compared to sellers.

With equality of demand and supply prices, goods are installed at the level of socially necessary costs and act as equilibrium prices. With increasing demand and the constant proposal, the price increases, the result of which is the growth of profits and the influx of capital in the industry, the goods of which have increased demand. This causes the influx of production factors and the growth of the proposal, and an increase in supply with constant demand reduces the price. Thus, the market mechanism restores disturbed equilibrium between supply and suggestion.

The market is a self-adjusting system. Market self-regulation is ensured using its mechanism. The mechanism of the market in various models of the market is unequal, however, the essence of its one and the same in any market.

The main task of the market mechanism is the formation of a market price. Market and price - categories due to commodity production.

At the same time, the market is primed, and the price is the secondary category. Market price is a tool for equalizing the interests of sellers and buyers, balanced demand and supply. As a result of the formation of the market price, buyers acquire what they would like to have at the given price, and sellers sell everything that they wanted to implement at this price. As a result, transactions are advantageous for both sides.

The peculiarity of the market mechanism is that each element is closely associated with a price that serves as the main tool affecting demand and supply.

Thus, the market mechanism is a mechanism for the formation of price and distribution of resources, the interaction of sellers and buyers of goods and services for the establishment of prices, the volume of production and its structure. The market mechanism functions in accordance with the system of economic laws: the law of value, the laws of supply and supply, the law of decreasing utmost utility, the law of decreasing return, etc. The effect of these laws is manifested through the main elements of the market mechanism.

The main operating goals in the market are the demand and supply, their interaction determines that in which amount to produce and at what price to implement.

Prices are the most important market tool as they provide its participants with the necessary information, on the basis of which the decision is made to increase or reducing the production of one or another product. In accordance with this information, the flow of capital and labor flows from one industry to another.

Free (competitive) market - This is a self-regulating system that achieves results and supports its equilibrium spontaneously, without interfering with external forces.

• Unlimited number of competitors.
• Sign, free access and exit from the market.
• Absolute mobility of all resources.
• The presence of prior information (through prices).
• Absolute homogeneity of products.
• Not one competitor does not affect the solution of others.

• It is a regulator of the economy.

• It is a means of providing national economic ties.
• Is an instrument of information (through prices)
• Provides optimization of the national economy.
• Provides a sane of the national economy.

Market conjuncture

The economic situation of producers and consumers, sellers and buyers depends on market conditions, which varies under the influence of numerous factors.

- This is a combination of developing on the market at any time of the economic conditions under which the process of selling goods and services is carried out.

Market infrastructure

Market infrastructure - This is a collection of institutes, systems, services, enterprises that mediate the movement of goods and services serving the market and providing its normal functioning.

• exchange
  • trade
  • currency;
• auctions, fairs;
• wholesale and retail enterprises;
• , insurance companies, funds;
• labor exchange;
• information centers;
• legal offices;
• advertising agencies;
• audit and consulting firms, etc.

All these elements are very closely connected with each other. If they are in equilibrium, the whole economy is also in. Conversely, destabilization of at least one of the elements is negatively affected by the entire market economy as a whole.

Market structure

Market structure - This is an internal structure, location, order of individual market elements.

• The structure of the market for market relations
  • consumer goods and services market
  • raw market market
• Market Structure for Market Subjects
  • buyer market
  • market of sellers
• Structure of the market in geographical position
  • local
  • national
  • world
• Market structure according to the degree of competition
• Market structure by industry
  • automotive
  • oil
• Market Structure for Sales
  • wholesale
  • retail
• The market structure in accordance with the current legislation
  • legal
  • illegal
  • "black market

Market functions

Information function

• number of products
• range
• quality

Intermediary fuchscination

The market allows economic agents to exchange the results of its economic activity. The market makes it possible to determine how effective and mutually beneficial is the relationship of relations between specific participants in social production.

Property function

The market establishes value equivalents for the exchange of products. At the same time, the market compares individual labor costs for the production of goods with a public standard, that is, it commensurate the costs and results, identifies the value of the goods by defining not only the amount of labor expended, but also the amount of benefits that the goods are for society.

Regulatory function

There is a balance between the manufacturer and the consumer, between the seller and the buyer.

Stimulating function

The market encourages manufacturers to create new products, necessary goods with the lowest costs and to obtain sufficient profits; Stimulates scientific and technological progress and on its basis increases the efficiency of the functioning of the entire economy.

Enterprises who failed to solve problems of improvement, ruin and die because of, freeing the place for more efficient. As a result, the level of sustainability of the entire economy as a whole is gradually increasing.

Advantages and disadvantages of the market mechanism

Benefits of a market mechanism

• Effective distribution of resources mitigating.
• The possibility of successful functioning in the presence of highly limited information (sometimes sufficient information about price level and costs are considered).
• Flexibility, high adaptability to changing conditions, fast adjustment of non-equilibrium.
• Optimal use of achievements (seeking to get the maximum profit, entrepreneurs are risky, developing new products, introducing new technologies into production).
• Regulation and coordination of people's activities without coercion, that is, freedom of choice and actions of economic entities.
• The ability to meet the diverse needs of people, improving the quality of goods and services.

Disadvantages of the market mechanism

• It does not contribute to the preservation of non-reproducible resources.
• It does not have an economic environmental protection mechanism (legislative acts are needed).
• Does not create incentives for the production of goods and services of collective use (education, health, defense).
• Does not ensure, does not guarantee the right to work and income, does not redistribute income in favor of unsecured.
• do not provide fundamental studies in science.
• Does not provide stable economic development (cyclic lifts, etc.)

All this predetermines the need for state intervention, which would complement the market mechanism, but did not led it to the deformation.

Markets in the National Economy

Nationwide markets: concept, types, principles of organization

National market - This is an economic structure that ensures efficient interaction of consumers and manufacturers.

• the exchange procedure is based on major economic laws;
• the process of interaction between consumers and manufacturers finds its expression in demand and proposal;
• it is a means of effective interaction of consumers and manufacturers.

For the normal operation of the market, the process of movement of goods is regulated by regulatory and legal acts, which creates its legal field.

The structure of the nationwide market includes the following markets:

• which includes the process of appealing the resources necessary for the production of goods. Goods here are the resources of production, and the pricing on them occurs as a result of the interaction of supply and demand;
• which includes the appeal of a specific product - capital, the price for which is determined by the interest rate for the use of money;
• . Its foundation make up the free relationship between the employee and the employer, and the subject of sale becomes labor. The price of it is established as a result of the interaction of supply and suggestions for it. Offer is a proposal of people who wish to work. And demand is the need for employees of certain qualifications and profession;
• Consumer goods market, which is a process of interaction between the manufacturer and the consumer about the good - the result of economic activities.

They represent the four basic elements of the national market - economic resources, capital, labor and consumption, whose functional interaction and determines the specifics of the national market.

The market is the benefit of goods and services that are included in the market.

The essence of the national market is associated with its specific qualitative and quantitative characteristics.

The main quantitative characteristics of the market are:

• number of manufacturers in the market;
• the number of consumers in the market;
• distribution of positions between manufacturers;
• the degree of concentration of the market, i.e. the volume of transactions carried out on it for the purchase and sale of goods.

The main qualitative characteristics of the market are:

• the possibility of entering the market of new manufacturers;
• the number of obstacles to enter the market of new manufacturers;
• level of competition in the market;
• degree of exposure to external factors;
• the presence and degree of interaction with other markets, such as international.

The interaction of the combination of high-quality and quantitative characteristics determines the type of market.

Depending on the specific conditions, each of the national markets can exist as:

Polypolia - This is the market of perfect competition. A large number of manufacturers and consumers of one type of good allows you to promptly respond to change price.

For this type of market, the freedom of behavior of all manufacturers and consumers who have all information about the market status is a prerequisite for this type of market. It is not subject to external regulation and acts freely, based only on the interaction of a large number of independent manufacturers and consumers. The existence of a similar market in practice is impossible, as there can be absolutely free producers and consumers on the market, and information is almost never available to everyone;

- This is the market on which only one manufacturer of a certain good and many consumers is valid. The manufacturer who occupies a monopoly position on the market offers a unique benefit that cannot be replaced by another, and sets the price for it alone;

Monopolistic competition - This is the market on which several large manufacturers of homogeneous good. This is good inherently uniformly, but each monopolist represents it with distinctive, unique features for him - product segment. Each monopolist has the necessary economic power to independently establish a pricing policy on the benefit produced by him, but it is limited to the extent that the consumer is forced to switch to the use of a substitute goods. Under these conditions, the operation of the monopolist is aimed at strengthening the degree of individuality of the goods offered by him (for example, with the help of a certain brand, brand, sign);

- This is the market on which several homogeneous manufacturers in their composition of the benefit take an agreement on the development of a single pricing policy and supply volumes. It has a tendency to the stability of the pricing policy, and the exit to it new producers is either difficult or impossible.

The structure of the nationwide market is heterogeneous, it includes a large number of smaller markets. Usually they specialize in circulation of a certain economic resource or good. The interaction of these national economy markets is the essence of the nationwide market, determines its dynamics and the pace of development.

Market failures

The market failures include:

• natural monopolies - One company meets all the demand for products, as the more it produces, the lower its average costs. Natural monopolies include railways, the country's energy system, metro, etc. Strengthening competition, i.e. The emergence of other manufacturers companies reduces the efficiency of using limited resources, since new firms would have to lay parallel communications during the competition;
• information asymmetry It is manifested in that one economic agent has more information about any subject or phenomenon than its partner. In this case, it turns out to be in a more winning position and can extract from it superfreight. Information asymmetry is particularly strongly manifested in industries such as education and health care, as a person is not able to evaluate the qualifications of a teacher or doctor in advance. Under the free market (without intervention of the state), such a situation would lead to the deterioration in the quality of education and medical services, and, therefore, would reduce the welfare of the Company;
• - The situation when the actions of a economic agent affect third parties that are not related to this economic agent. An example of a negative external effect can serve as environmental pollution by the manufacturing enterprise, loud music in neighbors, etc. At the same time, there are also positive external effects, for example, the arrangement of the apiary next to the fruit garden (the bees pollinate flowers, increasing the yield and number of honey). Since under the free market, the manufacturer is not interested in the external effects created by them, and in most cases they damage, the state must take control over them;
• - Goods used by all members of society without exception, and their volume and quality do not depend on the number of consumers. Such benefits include national defense, laws, law enforcement, health care system, etc. The market is not able to produce such benefits because it cannot provide payment for these goods (since anyone cannot be excluded from the use of this blessing). The state, collecting, is able to provide funding for public goods.

The main element of the market mechanism of self-regulation economists consider the price mechanism that balances demand and supply in the markets of ordinary products.

Demand - This is the amount of goods that the buyer is ready to buy at a certain price. Sentence - This is the number of goods that the seller is ready to sell the buyer at a certain price. The pricing mechanism is studied on a model that shows the reaction of buyers and sellers of any product to various price levels. Their behavior describe two simple laws:

• but) law of demand - the number of goods that consumers buy are inversely proportional to the price of goods;
• b) law of Offers - the number of goods that manufacturers sell are directly proportional to the price.

On the charts, these laws are depicted demand curves and curvions offer . These are curves are a lot of points, each of which shows how many products Q. (from English "Quantity" - quantity) would like to buy consumers at any point in time or sell manufacturers at a given price level R (from English. "Price" - price). In accordance with the laws of demand and supply curve D. (from the English. "Demand" - demand) is depicted by a downward line, and the proposal curve S. (from English. "Supply" - offer) - Line ascending. The reaction of buyers and sellers to change the price will be expressed in their movement along the curves - up (if the price of the product increases) or down (if the price of the goods decreases).

Fig. 3.

Demand and supply can grow or decline. For example, demand growth (Fig. 1b) for the period from January to February, it means that if in January buyers at a price of 5 monetary units (rubles, dollars, yen ...) revealed a desire to buy 3 pieces of this type of goods, then in February at the same price they already wish to purchase 7 pieces. Accordingly, the decline in demand shows that now buyers wish to buy for the same price not 3, but only 1 piece of goods. This is graphically portrayed by a shift of the demand curve to the right (from D. - in D. 1) with an increase in demand and its shift to the left (from D. - in D. 2) when it decreases. Similarly, you can explain the changes in the sentence (Fig. 1a): growth of the proposal (shift of the Curve of the Offer from S. in S. 1) means that sellers at the same price in 5 cash units are ready to sell no longer 10, and 12 pieces of goods; decline in supply (shift of the Curve Office from S. in S. 2) - not 10, but only 7. According to the pluralistic pricing concept proposed by Marshall, the price is formed as a result of the interaction of supply and demand. Having imposed on each other graphics of demand curves and suggestions (from fig. 1), we get the point of their intersection (point E.), which corresponds to the equality of supply and demand (Fig. 2a). This is the situation and is the equilibrium state that seeks to create a "invisible hand" of the market. In this case, sellers will offer for sale exactly so many products as at the cost of buying consumers.

The projection of the point of market equilibrium on the axis will show the equilibrium price (in fig. 2a R E. \u003d 3) and the equilibrium sales (on the chart Q. E. \u003d 5). Naturally, we are talking about the average price level; Real prices may deviate from this average, but these deviations will be generally mutually ridiculed.

If the real market average price is due to any circumstances (for example, the actions of the government that forbidden to assign a price higher or lower than a certain level) will deviate from the equilibrium level, then with the demand and suggestion of buyers and sellers, the market will strive to restore the lost equilibrium

Fig. four.

When the market price goes down, for example, to level 2 monetary units per piece, then buyers will express the desire to buy 10 pieces of goods, but sellers will be ready to offer them only 3 pieces. There will be a commodity deficit (10 - 3 \u003d 7), which will overcome, for example, selling a part of the goods "from under the floors" at a higher price. As a result of buyers' competition, each of which will strive to acquire the desired goods even for the price somewhat higher than the existing, the real price will gradually return to the equilibrium level. If, on the contrary, the market price will exceed the equilibrium and amount to 5 monetary units per piece, now competition will be existed between sellers: in a situation of excess supply over demand (10 - 3 \u003d 7), each of them will place buyers, offering their goods at least Slightly below existing, as a result of which the market price gradually "slides" down, to an equilibrium level. Thus, the "invisible hand" of the market automatically smoothes the emerging disproportions between supply and demand.

The formation of an equilibrium price, approximately one for all participants in market transactions, is beneficial to both individual buyers and individual sellers.

Suppose that for each unit of goods, which is offered for sale or want to buy, is a separate seller or buyer. Although the market equilibrium was established at a price of 3 monetary units (in our example in trading, six sellers and buyers will take part), however, among the participants of the sale and sales, there are sellers who were ready to implement their goods at a lower price (for example, Four sellers can sell in our example for 2 monetary units per piece), there are buyers who could buy at a higher price (for example, two buyers are ready to buy at the price of 5 units per piece). We are talking about sellers implementing products produced more efficiently (with lower costs) and buyers with higher income or more acute need for products.

Fig. five.

As a result of the formation of equilibrium prices and those and others will win - sellers to implement their goods more expensive, and buyers acquire it cheaper than they could. The winnings of these both groups corresponds to the squares of the figures marked on the graph, the value of which depends on the elasticity of supply and demand for the price.

This price equilibrium model is in the modern neoclassical theory of basic. Economists seek to consider any situations in economic life as a collision of interests that focus on price signals of sellers and buyers, as a result of which a market equilibrium is formed.

Advantages and disadvantages of the market mechanism.The market mechanism has both advantages and disadvantages.

To its advantages include:

• 1. Economic democracy - freedom of choice and actions of consumers and buyers (they are independent in making their decisions, conclusion of transactions);
• 2. Effective resource allocation;
• 3. Flexibility, high adaptability to changing conditions, the ability to meet diverse needs, improving the quality of goods and services, rapid adjustment of non-equilibrium.

In modern economic science, it is customary to allocate the following

1. The market is not able to withstand monopolistic trends. In the conditions of market elements, monopolistic structures that limit the freedom of competition are inevitably arise. With the irreplication of the market environment, monopolies are formed and strengthened. Unnecessary privileges are created for a limited circle of market subjects.

To support extremely high prices, monopolists are artificially reduced production. This causes the need to regulate prices, say, on products of commodity monopolies, electricity, transport.

2. The market is not interested and is not able to produce public benefits ("public goods"). These products are either not produced at all, or they are supplied to them in insufficient quantities.

The peculiarity of public goods is that everyone can use it, but it is not obliged to pay for them. In addition, it is usually impossible to limit their use.

Road signs regulating the rules of movement are required to use everything in order to avoid undesirable consequences. Vaccination should cover all residents, otherwise it will not be possible to exclude infectious diseases. Public benefits are non-competitive goods and services available to almost everyone.

Public benefits are free for the consumer, but are not free for society. The production of "free" goods is related to the costs that the market is not able to carry.

3. Market mechanism is unsuitable for eliminating external (side) effects. Economic activities in the market conditions affects not only its direct participants, but also other people. Its consequences are often negative.

As public wealth grows, the problem of external effects is becoming increasingly acute. An increase in the number of cars in the use is accompanied by air pollution. Cellulosic and paper plants poison water sources. Wide application of chemical fertilizers makes food unsuitable for use.

The market itself is not able to eliminate or compensate for the damage applied by external effects. The agreement between stakeholders without external intervention can be achieved only in rare cases where the negative effect is insignificant (see ch. 7). In practice, in case of serious problems, state intervention is needed. It introduces rigid standards, restrictions, uses the fines system, determines the boundaries that are not entitled to cross the participants in economic activity.

4. The market does not have the ability to provide social guarantees, neutralize excessive differentiation in the distribution of income. The market by nature ignores social and ethical criteria, i.e. Justice when distributing resources and income. It does not provide stable employment of the working-age population. Everyone must independently take care of its place in society, which inevitably leads to social bundle, strengthens social tensions.

"Normal" market generates abnormal proportions of the distribution of created wealth. Market relationships create favorable conditions for the manifestation of narrow-minded interests that generate speculation, corruption, racket, drug trafficking, other antisocial phenomena.

5. Market mechanism generates incomplete and not sufficiently perfect information. Only in the conditions of a fully competitive economy, market participants have enough comprehensive information about the prices and prospects for the development of production. But the competition itself causes firms to hide real data on the state of affairs. Information costs money, and economic agents - manufacturers and consumers - have it to varying degrees.

The absence of perfect information, infidelity and uneven distribution create advantages for some and undermine the ability to make optimal solutions from others. Sellers and buyers, entrepreneurs and workers do not possess equivalent information. Meanwhile, the information is in some respects public goods. The most complete and reliable information is not provided by the private market, but state institutions. So, the market is not an ideal mechanism for regulating economic activity.

Imperfections ("failures") of the market can be mitigated by the creation of relevant institutional structures, the participation of the state in the allocation of resources, solving problems that cannot be provided purely market tools.

Liberal economists claim that the disadvantages ("failures") of the state are even more dangerous than the "failures" of the market, and therefore the market system is although not ideal, but still the best of possible alternatives. The attempt of the countries of the socialist camp to prove the benefits of the planned economy before the market ended in 20 century. failure. Therefore, in the modern world, the market remains the main economic system, although it covers not all areas of economic life, and the "invisible hand" of the market is often adjusted by the "visible hand" of the state, major corporations, non-governmental organizations, etc.

Market mechanism Represents a set of interdependent methods and levers of economic impact on the production, exchange, distribution and consumption in the system of market laws and commodity-money relations.

Famous American economists Samuelson and Nordhaus define market Economic Regulatory Mechanism As an economy formation, when individual consumers and manufacturers interact through the market to solve common economic problems.

Polish economist Balzorovich sees market mechanism As a way to hold the equilibrium necessary between supply and offering in the horizontal direction. In his opinion, the market system can only be called such in which the market mechanism is the main way of distribution and coordination of goods.

The market freely functioning in reality bears free elements. It has natural and unnatural formations of monopolistic type, which seek to hold high prices and therefore interfere with the free movement of resources, which leads to restriction of market access.

The distortion of the market processes may adopt influence inflation, the incorrect state policy in the field of economics, miscalculation of entrepreneurs, non-sufficiency of commercial awareness and other reasons.

The development of distortion in this direction can continue until the start of the market mechanism. In this case, he acts the limit. Under his influence, despite all distortions and deformations, prices will change due to the influence of supply and demand for them, and investment flows, the movement of resources will continue to focus on demand fluctuations. Other links of the market mechanism remain unemployed, which retains the viability of the market.

Market mechanism (Market economy) functions due to the presence of important component elements in this system, which in general and make up the market mechanism. These most important elements include, first of all, manufacturers and consumers. The interaction between them is established as the exchange of results of activities. Manufacturers are suppliers consumers - its buyers. Consumption is a logical continuation of the production process in which the goods are recycled by users.

The next element is the economic isolation caused by a private ownership or mixed. Third element - prices. This is the most important element, since it is the prices that reflect the essence of mutual development in the market. The fourth element is the demand and supply. They, as well as prices, act the main elements of the market, ensuring the relationship between consumers of goods and their manufacturers. Fifth element - competition. It contributes to the expansion of production.

Competitive market mechanismthis is a way to interact subjects and the mechanism of free regulation of its proportions. Economist A. Smita called the competition "invisible hand" market. The main function of competition is to determine the magnitude of economic regulators, such as the price, the rate of interest, and others.

Competition is freedom to participate in economic units in any economic industry. Such freedom is necessary to adapt the economy to changes in technologies, supply of resources or consumer tastes. The main advantage of the market is that the effectiveness of its production is constantly stimulated. The object of competition is the price and design and quality of products. Competition is characterized by the ability to develop scientific and technological progress, responding to changes in demand, alignment of the rate of profit and the level of wages in the sectors of the People's Economy.

Essence Ryka:

In a broad sense, the market implies a system of economic relations between people, covering the processes of production, distribution, exchange and consumption. The market acts as a complex mechanism for the functioning of the economy based on the use of various forms of ownership, commodity-monetary relations and the financial and credit system. The market system is based on the private form of ownership to the factors of production, entrepreneurial activity and competition between participants in market transactions.

The emergence and formation of the market as an economic system is a long historical process, the beginning of which predetermined the two most important conditions:

1) Public division of labor,

2) Economic separation of commodity producers and the emergence of private ownership of production factors.

Market mechanism includes three main elements:

1) prices of consumer goods and economic resources;

2) the demand for goods and its proposal;

3) Competition.

The establishment of prices for economic resources is a guide for the manufacturer of goods in determining the volume of production and the choice of technology. Prices for produced goods and services are predetermined by whom, at this level of income, a manufactured product will be consumed.

Demand for goods is the need for goods in the market, determined by the number of goods that consumers can buy in existing prices and cash income.

The offer of goods is the amount of goods available in this price. The change in the relationship between supply and proposal generates fluctuations in market prices around the so-called equilibrium price, in which the equilibrium of production and consumption is ensured.

Competition in market relations, both between producers of goods for the most favorable conditions for the production and sale of products, and between buyers of goods for the opportunity to purchase the necessary goods (especially in deficiency conditions). The nature of competition may be different, it significantly affects the method of achieving market balance.

The market performs the following major functions:

1) the pricing or function of self-regulation of commodity production. Permanent price fluctuations around the equilibrium price under the influence of changes in supply and supply indicate the growth or decline in demand for goods, it encourages the manufacturer to increase or decrease the volume of goods output;

2) regulating. The market establishes the main proportions in the economy on the micro- and macro level by expanding or narrowing demand and suggestions. With the help of regulating function, economic resources are distributed by industry. In those sectors where price increases is observed, there is a revival of production, since the owners of production factors are seeking here, then there will be an excess of the supply of goods over demand for them, the return process will begin - market prices will begin to decline and the market prices will occur.

3) stimulating. It encourages producers to create the necessary goods with the lowest costs and gaining higher profits by reducing the costs and introduction of innovations. If a separate producer will use the achievements of scientific and technological progress, improve technology, save resources, it will reduce the cost of producing goods and get additional profits;

4) Differentiating. Those firms whose costs for the production of goods are lower than the established market price receive income and become richer, thereby strengthening their position in this market segment. Those firms that suffer losses become bankrupt and are forced to go from the market for this product. The separation (differentiation) of the incomes of market relations participants is an objective result of the valuation mechanism;

5) Sanging. The market mechanism is a tough system and with the help of competition purifies social production from economically unstable, non-visual business units, leaving the most enterprising and efficient. In this regard, the average level of stability of the country's economy is continuously increased;

6) mediation. In a market economy with sufficiently developed competition, the consumer has the ability to choose the optimal supplier of goods. At the same time, the seller of the goods is given the opportunity to choose the most suitable buyer;

7) information. Through constantly changing prices and interest rates on the loan, the market gives participants in the production of objective information on the number, assortment and the quality of those goods and services that are shipped to the market.

The market infrastructure includes:

Commodity Market Infrastructure (Commodity Exchanges, Wholesale and Retail

trade, auctions, fairs, mediation firms);

Financial Market Infrastructure (stock and currency exchanges,

banks, insurance companies, investment funds);

Labor market infrastructure (Labor Exchange, Employment Service,

retraining staff, labor migration).

Market Subjects (Structure):

The main subjects of the market economy is customary to divide into three groups: households, firms, state.

The household (household) has the following signs:

1) this is an economic unit that combines persons living under one roof and host (or forced to accept) general financial decisions;

2) this is the main structural unit operating in the consumer sector of the economy;

3) These are owners and suppliers of economic resources (labor, land, capital), independently make decisions on their sale;

4) Money received from the sale of economic resources is spent on satisfaction of personal needs. The purpose of the household as a consumer is to maximize utility from consumption of purchased goods and services.

The company (enterprise) has the following signs:

1) this is an economic unit that buys economic resources for the production of goods and services;

2) this is the main structural unit that is functioning in the production of goods and services and ensuring their receipt to the markets of consumer goods;

3) the company is a fretended user of purchased economic resources (production factors);

4) When creating a company, an investment of its own or borrowed capital is assumed, and the income from its use is spent on the expansion of production activities.

The purpose of the company is to maximize profits.

The state is mainly different in various budgetary organizations that carry out the functions of state regulation of the economy, social policy and foreign economic activity.

The goal of the state is the maximization of social welfare.

Types of markets:

1) The degree of economic independence of market entities (sellers and buyers):

The market of perfect competition (free);

Monopolistic competition;

Oligopoly, incl. duopoly;

Pure monopoly;

Monopsony

2) Object of purchase and sale (the type of goods sold)

Market of goods and services (consumer (;

Production market of production;

Market of information, intellectual products, spiritual benefits;

Market housing, buildings, etc.;

Labor market;

Financial market

3) the degree of coverage of market space

Regional;

National;

Inter-election;

World

4) market functioning nature

Spontaneous;

Adjustable;

Shadima

5) Type of sales of goods and services

Sale for cash;

Sale on non-cash payment;

Sale on credit;

Sale secured by property;

6) Trade method:

Retail;