Market System - Protocols

Protocols

The market itself provides a medium of exchange for the contracts and coupons and cash to seek prices relative to each other, and for those to be publicized. This publication of current prices is a key feature of market systems, and is often relevant far beyond the current groups of buyers and sellers, affecting others' supply and demand decisions, e.g. whether to produce more of a commodity whose price is now falling. Market systems are more abstract than their application to any one use, and typically a 'system' describes a protocol of offering or requesting things for sale. Well-known market systems that are used in many applications include:

• auctions - the most common, including:
  • Dutch auctions
  • reverse auctions
  • silent auctions
• rationing (including the command economy of some states)
• regulated market (including most real-life examples as above)
• black market (the term 'black' indicating lack of regulation, or any trade, often illegal, operating in violation of official regulations)

The term 'laissez-faire' ("let alone") is sometimes used to describe some specific compromise between regulation and black market, resulting in the political struggle to define or exploit "free markets". This is not an easy matter to separate from other debates about the nature of capitalism. There is no such thing as a "free" market other than in the sense of a black market, and most free-market advocates favor at least some form of regulated market, e.g. to prevent outright fraud, theft, and retain some degree of credibility with the larger public. This political debate is out of the scope of this article, other than to note that the "free" market is usually a "less regulated" market, but not qualitatively different from other regulated markets, in any society with laws, and that what opponents of "free markets" usually seek is some kind of moral purchasing rather than pure rationing.

As this debate suggests, key debates over market systems relate to their accessibility, safety, fairness, and ability to guarantee clearance and closure of all transactions in a reasonable period of time.