Types of markets

What is a market?

A market is wherever people come together to buy and sell goods. It may be called a bazaar, a haat in Hindi or a marukatte in Kannada, and it can be a physical place or, more and more, online. Through markets, individuals, households and businesses get the goods and services they need and want. Needs are things we must have to stay alive, like food, water, shelter and clothes; wants are things we would like but can do without. Markets also connect people, traditions and ideas.

Hampi Bazaar

In the 16th century, Hampi Bazaar in Karnataka, opposite the Virupaksha temple, was one of the richest markets of the Vijayanagara Empire, a centre of booming trade. Foreign visitors were amazed. The Portuguese traveller Domingos Paes praised Hampi as the most plentifully supplied city in the world, with grains, seeds, milk, oil, silk, cows, rabbits, horses, quails and partridges on sale. Another Portuguese visitor, Fernao Nuniz, wrote of craftsmen at work in the streets, of jewels, rubies, diamonds and pearls, cotton cloth and heaps of grass and straw, and wondered how so dry a land could hold so much.

Physical and online markets

In a physical market, buyers meet sellers in person and pay for goods or services: weekly markets and haats with vendors and carts, local markets with shops and street-food stalls, and malls. In an online market, buyers and sellers need not meet and may be thousands of kilometres apart, trading through apps or websites. People order books, clothes, furniture, groceries and electronics for delivery to the door, manufacturers buy components as inputs, and services such as online classes are bought and paid for online. Some services, such as tailoring, still need a physical market. The stock market, where shares rather than goods are traded, is another kind, explained in shares and the stock market.

Domestic and international markets

A domestic market is one where buying and selling happen within the country, like the paper for this textbook, bought from paper mills across India. An international market lies beyond a nation’s borders: sellers export their products to other countries, and buyers import goods made abroad. Fig. 12.10 shows India sending software and other services to North America, chemicals to South America, medicines to Africa, engineering goods to Europe and refined petroleum to West Asia, and buying aircraft, copper ore, diamonds, electrical equipment, crude petroleum, fertilisers and vegetable oils. In 2024 India imported more vegetable oil than any other country, most of its palm oil coming from Malaysia, Indonesia and Thailand.

Wholesale and retail

In physical markets, wholesalers buy goods in bulk from producers, such as grain, vegetables and fruit straight from farms, and keep them in large warehouses called godowns, with cold storage for perishables, before bringing them to markets called mandis. There are wholesale markets for spices and dry fruits (Khari Baoli, Old Delhi), flowers (Bengaluru), gems and jewellery (Johari Bazaar, Jaipur), and for chemicals, electronics and building materials. Wholesalers supply retailers, the shops near our homes, which sell smaller quantities to final consumers; salons, cinemas and restaurants are retailers of services. Where distance or terrain makes many retailers hard to reach, distributors fill the gap. Online, manufacturers send stock to the warehouse of an aggregator, which takes orders, packs the goods and delivers them.

Surat: a chain of markets

Surat in Gujarat, which the chapter calls Asia’s oldest textile market, shows a supply chain at work. Raw cotton arrives from cotton mandis in Maharashtra and other parts of Gujarat, and thousands of units weave it on power looms, dye and process it, and make it into sarees and ready-made garments, each stage with its own market. Wholesalers then judge how much retailers need and supply shops across India and abroad, keeping the flow steady. Surat also has the world’s largest diamond industry, where about 15 lakh artisans cut and polish diamonds, and its west-coast ports, roads and railways have helped it trade since the 16th century.

Why it matters

Knowing the kinds of markets, and the chain behind every product, helps us see how a sari from Surat or a bag of rice reaches our homes and why each link adds to the price. How prices are decided is in how markets set prices, and the government’s part in role of government in markets. Answers to every question are in the NCERT solutions for Chapter 12; see also the full Chapter 12 notes.