Market implies an area where buyers and sellers meet and trade with one another either directly or through middlemen to determine the price of the particular product, by demand and supply forces. There are various forms of the market that vary in their nature, structure, size, etc.
The term industry is often misconstrued with the market, however, the industry is just one of the component of the market. Industry alludes to a set of firms that are engaged in the same type of business activity, i.e. producing a specific product or rendering a particular service.
The basic difference between industry and market is that while the industry is just a sector, market denotes an entire system, that facilitates the exchange of goods and services between buyers and sellers. Check out this article to have a complete understanding of the two topics.
Content: Industry Vs Market
|Basis for Comparison||Industry||Market|
|Meaning||An industry is a collection of companies that offer similar or substitute products to the customers and compete with one another.||Market refers to a mechanism that helps buyers and sellers in entering into transactions relating to exchange of goods and services.|
|Goods and services||Only one type of goods and services are offered.||Variety of goods and services are offered.|
|Competition||Exist between the firms operating in the industry.||Exist between various sellers and buyers.|
Definition of Industry
Industry implies a collection of firms that are more or less identical to one another, with respect to the business operations conducted by them, i.e. firms engaged in manufacturing a particular type of product or rendering specific services are altogether called as an industry. The number of firms operating in an industry may differ, on the basis of its structure.
In an industry, the firms offer homogeneous products to the target customers, that are considered as a perfect substitute of one another. Moreover, there are certain firms that operate in an industry, which offers differentiated products, which are not perfect substitutes, but the close substitute of each other.
Definition of Market
In simple terms, the market is described as a place where goods and services are bought and sold. In business, the market is not just a place but it is much more than that as it refers to the system of exchange, whereby buyers and sellers meet and interact with each other to fix the price and decide the quantity to be transacted.
The presence of market may or may not be physical, as well as the direct interaction between buyer and seller is also not necessary, as it can also take place through phone, email or via dealers. The four major components of a market are buyers, sellers, commodity and price. In a market, the price of a product is determined by the forces called as demand and supply.
The market can be broadly classified as product market and factor market. The product market is one for goods and services needed by the households, whereas factor market, implies the market for resources needed by the firms, i.e. land, labour, capital, machinery, material etc. Further, in economics, the classification of the market is based on geographical area, time, competition, regulation and volume of business.
Key Differences Between Industry and Market
The points given below are substantial so far as the difference between industry and market is concerned:
- A group of firms supplying products to the customers which are close substitutes of each other, constitute an industry. On the contrary, the market is a system, that helps buyers and sellers interact and enter into the transactions concerning the exchange of products and services.
- In an industry, only a particular type of goods and services are offered. Conversely, in a market different types of goods and services are offered by the firms.
- While the industry is all about producers, the market is created by customers.
- In an industry, the competition exists between the firms to produce the best product, to gain a competitive advantage. As against this, in a market different buyers and sellers compete with one another, in the sense that every buyer attempts to pick the best product and every seller tries to sell the maximum products, so as to get the maximum share in the market.
By and large, the industry is nothing but a specific group of firms that are engaged in similar business activities. On the other side, market implies a medium that assists buyers and sellers of a particular product or service to come together and facilitate the exchange for a consideration.
FARHANA SHAIK says
EXCELLENT PRESENTATION MAM!!🌟
Please upload the differences between OLIGOPOLY and MONOPOLISTIC competition.👍
Yeah I love the presentation as well.