Market

The definition of a market is by no means simple ​(Tirole, 1988)​. Markets are spaces where sellers and buyers exchange goods or services in return for a monetary payment ​(Belleflamme & Peitz, 2015)​. This space may be physical or virtual. There are different configurations of markets. For instance, spaces with a small number of sellers (oligopoly) with market power to set the price. The contrary situation is also possible where a small number of buyers face many sellers. Public procurement of goods and services is a good example for this type of markets. We should not forget situations in which buyers are not the final consumers, retailers for example ​(Belleflamme & Peitz, 2015)​. What is more, markets may exchange homogeneous or differentiated goods. Homogenous goods are typically considered as perfect substitutes because final consumers cannot distinguish the differences between two goods supplied in the market. On the other hand, differentiation allows consumers to find alternatives.