Market (economics)

In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour power) to buyers in exchange for money. It can be said that a market is the process by which the value of goods and services are established. Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any tradeable item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale (local produce or stock registration).
Markets can differ by products (goods, services) or factors (labour and capital) sold, product differentiation, place in which exchanges are carried, buyers targeted, duration, selling process, government regulation, taxes, subsidies, minimum wages, price ceilings, legality of exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry, relative prices, volatility and geographic extension. The geographic boundaries of a market may vary considerably, for example the food market in a single building, the real estate market in a local city, the consumer market in an entire country, or the economy of an international trade bloc where the same rules apply throughout. Markets can also be worldwide, see for example the global diamond trade. National economies can also be classified as developed markets or developing markets.
In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services, with or without money, is a transaction. Market participants or economic agents consist of all the buyers and sellers of a good who influence its price, which is a major topic of study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. A major topic of debate is how much a given market can be considered to be a "free market", that is free from government intervention. Microeconomics traditionally focuses on the study of market structure and the efficiency of market equilibrium; when the latter (if it exists) is not efficient, then economists say that a market failure has occurred. However, it is not always clear how the allocation of resources can be improved since there is always the possibility of government failure.
In economics, a market is a coordinating mechanism that uses prices to convey information among economic entities (such as firms, households and individuals) to regulate production and distribution. In his seminal 1937 article "The Nature of the Firm", Ronald Coase wrote: "An economist thinks of the economic system as being coordinated by the price mechanism....in economic theory, we find that the allocation of factors of production between different uses is determined by the price mechanism". Thus the usage of the price mechanism to convey information is the defining feature of the market. This is in contrast to a firm, which as Coase put it, "the distinguishing mark of the firm is the super-session of the price mechanism".
Thus, Firms and Markets are two opposite forms of organizing production; Coase wrote:
There are also other hybrid forms of coordinating mechanisms, in between the hierarchical firm and price-coordinating market(e.g. global value chains, Business Ventures, Joint Venture, and strategic alliances).
The reasons for the existence of firms or other forms of co-ordinating mechanisms of production and distribution alongside the market are studied in "The Theory of the Firm" literature, with various complete and incomplete contract theories trying to explain the existence of the firm. Incomplete contract theories that are explicitly based on bounded rationality lead to the costs of writing complete contracts. Such theories include: Transaction Cost Economies by Oliver Williamson and Residual Rights Theory by Groomsman, Hart, and Moore.
The market/firm distinction can be contrasted with the relationship between the agents transacting. While in a market, the relationship is short term and restricted to the contract. In the case of firms and other co-ordinating mechanisms, it is for a longer duration.
In the modern world, much economic activity takes place through fiat and not the market. Lafontaine and Slade (2007) estimates, in the US, that the total value added in transactions inside the firms equal the total value added of all market transactions. Similarly, 80% of all World Trade is conducted under Global Value Chains (2012 estimate), while 33% (1996 estimate) is intra-firm trade. Nearly 50% of US imports and 30% of exports take place within firms. While Rajan and Zingales (1998) have found that in 43 countries two-thirds of the growth in value added between 1980 and 1990 came from increase in firm size.
A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any trade-able item to be evaluated and priced. A market sometimes emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods.
Markets of varying types can spontaneously arise whenever a party has interest in a good or service that some other party can provide. Hence there can be a market for cigarettes in correctional facilities, another for chewing gum in a playground, and yet another for contracts for the future delivery of a commodity. There can be black markets, where a good is exchanged illegally, for example markets for goods under a command economy despite pressure to repress them and virtual markets, such as eBay, in which buyers and sellers do not physically interact during negotiation. A market can be organized as an auction, as a private electronic market, as a commodity wholesale market, as a shopping center, as complex institutions such as international markets and as an informal discussion between two individuals.
Markets vary in form, scale (volume and geographic reach), location and types of participants as well as the types of goods and services traded. The following is a non exhaustive list:
Financial markets facilitate the exchange of liquid assets. Most investors prefer investing in two markets:
There are also:
In economics, a market that runs under laissez-faire policies is called a free market: it is "free" from the government, in the sense that the government makes no attempt to intervene through taxes, subsidies, minimum wages, price ceilings and so on. However, market prices may be distorted by a seller or sellers with monopoly power, or a buyer with monopsony power. Such price distortions can have an adverse effect on market participant's welfare and reduce the efficiency of market outcomes. The relative level of organization and negotiating power of buyers and sellers also markedly affects the functioning of the market.
Markets are a system and systems have structure. The structure of a well-functioning market is defined by the theory of perfect competition. Well-functioning markets of the real world are never perfect, but basic structural characteristics can be approximated for real world markets, for example:
Markets where price negotiations meet equilibrium, but the equilibrium is not efficient are said to experience market failure. Market failures are often associated with time-inconsistent preferences, information asymmetries, non-perfectly competitive markets, principal–agent problems, externalities, or public goods. Among the major negative externalities which can occur as a side effect of production and market exchange, are air pollution (side-effect of manufacturing and logistics) and environmental degradation (side-effect of farming and urbanization).
There exists a popular thought, especially among economists, that free markets would have a structure of a perfect competition. The logic behind this thought is that market failure is thought to be caused by other exogenic systems, and After eliminating external influences or interventions, often referred to as "exogenic systems," the markets were allowed to operate independently, adhering to the principles of free-market economics. This approach assumes that by removing regulatory barriers, subsidies, or other external controls, the market can function more efficiently. The underlying belief is that such "freed" markets, driven by the forces of supply and demand, can self-regulate and allocate resources optimally, thus preventing or minimizing occurrences of market failures. However, this perspective remains a topic of debate among economists and policymakers, as concepts like the world market return policy, along with issues such as monopolies, externalities, and information asymmetries, highlight the complexities of market dynamics.
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For a market to be competitive, there must be more than a single buyer or seller. It has been suggested that two people may trade, but it takes at least three persons to have a market so that there is competition in at least one of its two sides. However, competitive markets—as understood in formal economic theory—rely on much larger numbers of both buyers and sellers. A market with a single seller and multiple buyers is a monopoly. A market with a single buyer and multiple sellers is a monopsony. These are "the polar opposites of perfect competition".
As an argument against such logic, there is a second view that suggests that the source of market failures is inside the market system itself, therefore the removal of other interfering systems would not result in markets with a structure of perfect competition. As an analogy, such an argument may suggest that capitalists do not want to enhance the structure of markets, just like a coach of a football team would influence the referees or would break the rules if he could while he is pursuing his target of winning the game. Thus, according to this view, capitalists are not enhancing the balance of their team versus the team of consumer-workers, so the market system needs a "referee" from outside that balances the game. In this second framework, the role of a "referee" of the market system is usually to be given to a democratic government.
Disciplines such as sociology, economic history, economic geography and marketing developed novel understandings of markets studying actual existing markets made up of persons interacting in diverse ways in contrast to an abstract and all-encompassing concepts of "the market". The term "the market" is generally used in two ways:
Economics used to be called political economy, as Adam Smith defined it in The Wealth of Nations:
The earliest works of political economy are usually attributed to United Kingdom scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). Smith describes how exchange of goods arose:
And explains how exchanged mediated by money came to dominate the market:
Microeconomics (from Greek prefix mikro- meaning "small" and economics) is a branch of economics that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources (see scarcity). On the other hand, macroeconomics (from the Greek prefix makro- meaning "large" and economics) is a branch of economics dealing with the performance, structure, behavior and decision-making of an economy as a whole, rather than individual markets.
The modern field of microeconomics arose as an effort of neoclassical economics school of thought to put economic ideas into mathematical mode. It began in the 19th century debates surrounding the works of Antoine Augustin Cournot, William Stanley Jevons, Carl Menger and Léon Walras—this period is usually denominated as the Marginal Revolution. A recurring theme of these debates was the contrast between the labor theory of value and the subjective theory of value, the former being associated with classical economists such as Adam Smith, David Ricardo and Karl Marx (Marx was a contemporary of the marginalists). A labour theory of value can be understood as a theory that argues that economic value is determined by the amount of socially necessary labour time while a subjective theory of value derives economic value from subjective preferences, usually by specifying a utility function in accordance with utilitarian philosophy.
In his Principles of Economics (1890), Alfred Marshall presented a possible solution to this problem, using the supply and demand model. Marshall's idea of solving the controversy was that the demand curve could be derived by aggregating individual consumer demand curves, which were themselves based on the consumer problem of maximizing utility. The supply curve could be derived by superimposing a representative firm supply curves for the factors of production and then market equilibrium (economic equivalent of mechanical equilibrium) would be given by the intersection of demand and supply curves. He also introduced the notion of different market periods: mainly long run and short run. This set of ideas gave way to what economists call perfect competition—now found in the standard microeconomics texts, even though Marshall himself was highly skeptical it could be used as general model of all markets.
Opposed to the model of perfect competition, some models of imperfect competition were proposed:
Around the 1970s the study of market failures came into focus with the study of information asymmetry. In particular, three authors emerged from this period: Akerlof, Spence and Stiglitz. Akerlof considered the problem of bad quality cars driving good quality cars out of the market in his classic "The Market for Lemons" (1970) because of the presence of asymmetrical information between buyers and sellers. Michael Spence explained that signaling was fundamental in the labour market since employers cannot know beforehand which candidate is the most productive, a college degree becomes a signaling device that a firm uses to select new personnel. Stiglitz provided some general conditions under which market equilibrium is not efficient: presence of externalities, imperfect information and incomplete markets.
György Lukács, a founder of Western Marxism wrote about the essence of commodity-structure:.
Human labour is abstracted and incorporated in commodities:
The ultimate problem for the thought of the bourgeoisie is the crisis: the qualitative existence of the 'things' misunderstood as use-values become the decisive factor. The failure is characteristic of classical economics and bourgeoisie economics, inadequate at explaining the true movement of economic activity in toto. The state has a system of law corresponding to capitalist needs: bureaucracy, formal standardization of justice and civil service.
C. B. Macpherson identifies an underlying model of the market underlying Anglo-American liberal democratic political economy and philosophy in the seventeenth and eighteenth centuries: persons are cast as self-interested individuals, who enter into contractual relations with other such individuals, concerning the exchange of goods or personal capacities cast as commodities, with the motive of maximizing pecuniary interest. The state and its governance systems are cast as outside of this framework. This model came to dominant economic thinking in the later nineteenth century, as so called liberal economists such as Ricardo, Mill, Jevons, Walras and later neo-classical economics shifted from reference to geographically located marketplaces to an abstract "market". This tradition is continued in contemporary neoliberalism epitomised by the Mont Pelerin Society which gathered Frederick Hayek, Ludwig von Mises, Milton Friedman and Karl Popper, where the market is held up as optimal for wealth creation and human freedom and the states' role imagined as minimal, reduced to that of upholding and keeping stable property rights, contract and money supply. According to David Harvey, this allowed for boilerplate economic and institutional restructuring under structural adjustment and post-Communist reconstruction. Similar formalism occurs in a wide variety of social democratic and Marxist discourses that situate political action as antagonistic to the market.
A central theme of empirical analyses is the variation and proliferation of types of markets since the rise of capitalism and global scale economies. The Regulation school stresses the ways in which developed capitalist countries have implemented varying degrees and types of environmental, economic and social regulation, taxation and public spending, fiscal policy and government provisioning of goods, all of which have transformed markets in uneven and geographical varied ways and created a variety of mixed economies.
Drawing on concepts of institutional variance and path dependence, varieties of capitalism theorists (such as Peter Hall and David Soskice) identify two dominant modes of economic ordering in the developed capitalist countries:
However, such approaches imply that the Anglo-American liberal market economies in fact operate in a matter close to the abstract notion of "the market". While Anglo-American countries have seen increasing introduction of neo-liberal forms of economic ordering, this has not led to simple convergence, but rather a variety of hybrid institutional orderings. Rather, a variety of new markets have emerged, such as for carbon trading or rights to pollute. In some cases, such as emerging markets for water in England and Wales, different forms of neoliberalism have been tried: moving from the state hydraulic model associated with concepts of universal provision and public service to market environmentalism associated with pricing of environmental externalities to reduce environmental degradation and efficient allocation of water resources. In this case liberalization has multiple meanings:
In a period of fiscal and ideological crisis, state failure is seen as the catalyst for liberalization, however the failure in assuring water quality can be seen as a driver for economic and ecological reregulation (in this case coming from the European Union). More broadly the idea of a water market failure can be seen as the explanation for state intervention, generating a natural monopoly of hydraulic infrastructure and the regulation of externalities such as water pollution. The situation however is not that simple, as the regulator may have the duty of introducing competition, which can be:
Introduction of metering can result in both restriction and increase of consumption with LRMC pricing being the regulator (Ofwat) preferred methodology.
Paul Dulaney Converse and Fred M. Jones wrote:
The methods of studying marketing are:
Businesses market their products/services to a specific segments of consumers: the defining factors of the markets are determined by demographics, interests and age/gender. A small market is a niche market, while a big market is a mass market. A form of expansion is to enter a new market and sell/advertise to a different set of users.
The marketing management school, evolved in the late 1950s and early 1960s, is fundamentally linked with the marketing mix framework, a business tool used in marketing and by marketers. In his paper "The Concept of the Marketing Mix", Neil H. Borden reconstructed the history of the term "marketing mix". He started teaching the term after an associate, James Culliton, described the role of the marketing manager in 1948 as a "mixer of ingredients"; one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried. The functions of total marketing include advertising, personal selling, packaging, pricing, channeling and warehousing. Borden also identified the market forces affecting marketing mix:
Borden concludes saying that marketing is more an art than a science. The marketer E. Jerome McCarthy proposed a four Ps classification (product, price, promotion, place) in 1960, which has since been used by marketers throughout the world. Koichi Shimizu proposed a 7Cs Compass Model (corporation, commodity, cost, communication, channel, consumer, circumstances) to provide a more complete picture of the nature of marketing in 1981. Robert F. Lauterborn wrote about the Four P's in 1990
He instead advocated a four Cs classification which is a more consumer-oriented version of the four Ps that attempts to better fit the movement from mass marketing to niche marketing:
Max Weber defines the measure of rational economic action as the:
Opposition of interests is typically resolved by bargaining or by competitive biding:
Money may classified as:
Weber defines:
Weber defines "formal rationality of economic action" to designate the extent of quantitative calculation or accounting and "substantive rationality" as the degree a group of persons is or could be adequately provided with good by means of oriented course of social action. A prominent entry-point for challenging the market model's applicability concerns exchange transactions and the homo economicus assumption of self-interest maximization. As of 2012, a number of streams of economic sociological analysis of markets focus on the role of the social in transactions and on the ways transactions involve social networks and relations of trust, cooperation and other bonds. Economic geographers in turn draw attention to the ways exchange transactions occur against the backdrop of institutional, social and geographic processes, including class relations, uneven development and historically contingent path-dependencies. Pierre Bourdieu has suggested the market model is becoming self-realizing in virtue of its wide acceptance in national and international institutions through the 1990s.
Michel Callon traces the history of how the market as a place (fairs, flea markets, fish markets) became an abstract concept (market for ideas, dating market, job market) which he calls the interface market model. This abstraction proceeds in three layers:
The interface market model thus establishes that:
The limitations of this model are:
Callon offer the market agencements (heterogenous assemblage) model as an alternative, its features being:
Market agencements function through framing, that is action is oriented to a strategic goal (obtaining bilateral transactions), for example market oriented passiva(c)tion:
Callon identifies the activities necessary for framing:
Alfred Marshall wrote:
According to Max Weber the spirit of capitalism as preached by Benjamin Franklin is directly connected with utilitarianism, rationalism and Protestantism. Luther calling was not a monastic one but involves the fulfilments of obligations imposed by one's position in the world. The pursuit of money and earthly goods was not viewed positively by Protestantism, the Puritans however emphasized that God blessings, like in the Book of Job, applied also to material life. The limitation of consumption inevitably results in capital accumulation, therefore, for Weber, the Puritan's idea of the calling and ascetic conduct contributed to development of capitalism: saving is an ascetic activity.
Embeddedness expresses the idea that the economy is not autonomous but subordinated to politics, religion, and social relations. Polanyi's use of the term suggests the now familiar idea that market transactions depend on trust, mutual understanding, and legal enforcement of contracts. Michel Callon's concept of framing provides a useful schema: each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are "formatted" as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange under certain sets of rules. Therefore, for Challon, market transactions can never be disembedded from social and geographic relations and there is no sense to talking of degrees of embeddedness and disembeddeness. During the 20th century two common forms of critique were made:
These are common themes in interpretive social science, cultural studies and post-structuralism. However, as Timothy Mitchell points out this mode of thought tends to put aside the real, the natural and nonhuman: the idea that a universal processes exists such as modernity, capitalism and globalization should not be taken for granted. An emerging theme is the interrelationship, inter-penetrability and variations of concepts of persons, commodities and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralist theorizing that draws on Michel Foucault and Actor Network Theory and stress relational aspects of person-hood, and dependence and integration into networks and practical systems. Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities.
In social systems theory (cf. Niklas Luhmann), markets are also conceptualized as inner environments of the economy. As horizon of all potential investment decisions the market represents the environment of the actually realized investment decisions. However, such inner environments can also be observed in further function systems of society like in political, scientific, religious or mass media systems.
Wilhelm Launhardt, a location theorist, wrote:
Transportation can be carried either by stone-paved roads or railways, the former not being fully developed by private capital alone. A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration and highlight geographic variations in the structures, institutions, histories, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange. Reference to actual markets can show capitalism not as a totalizing force or completely encompassing mode of economic activity, but rather as "a set of economic practices scattered over a landscape, rather than a systemic concentration of power".
Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economies, to informal markets, barter systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth centuries did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergent world economy. By their liberal nature, so called capitalist markets have almost always included a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements. Helpful here is J.K. Gibson-Graham's complex topology of the diversity of contemporary market economies describing different types of transactions, labour and economic agents. Transactions can occur in black markets (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: one cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability. This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets. Gibson-Graham thus read a variety of alternative markets for fair trade and organic foods or those using local exchange trading system as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities.
Economic anthropology is a scholarly field that attempts to explain human economic behavior in its widest historic, geographic and cultural scope. Its origins as a sub-field of anthropology begin with the Polish–British founder of anthropology, Bronisław Malinowski, and his French compatriot, Marcel Mauss, on the nature of gift-giving exchange (or reciprocity) as an alternative to market exchange. Studies in economic anthropology for the most part are focused on exchange but they a complex relationship with the discipline of economics, of which it is highly critical: for example Trobianders described by Malinowski deviate from rational self-interested individual.
Bronisław Malinowski's path-breaking work, Argonauts of the Western Pacific (1922), addressed the question "why would men risk life and limb to travel across huge expanses of dangerous ocean to give away what appear to be worthless trinkets?". He begins by describing trade in the South Sea:
The economic situation can vary considerably depending on the tribes and islands: for example the Gumawana villagers are known as efficient sailors and for their skill in pottery, they are, however, island monopolists keeping the trade in their own hands without improving it. In a series of three expeditions, Malinowski carefully traced the network of exchanges of bracelets and necklaces across the Trobriand Islands and established that they were part of a system of inter-tribal exchange: it is known as the Kula ring, a closed circuit in which necklaces of red shells go in a clockwise motion and bracelets of white shell go in anticlockwise motion. Malinowski goes on to explain:
In the 1920s and later, Malinowski's study became the subject of debate with the French anthropologist, Marcel Mauss, author of The Gift (Essai sur le don, 1925). Malinowski emphasized the exchange of goods between individuals and their non-altruistic motives for giving: they expected a return of equal or greater value (colloquially referred to as "Indian giving"). In other words, reciprocity is an implicit part of gifting as no "free gift" is given without expectation of reciprocity. In contrast, Mauss has emphasized that the gifts were not between individuals, but between representatives of larger collectivities. He stated that this exchange system was clearly linked to political authority. He argued these gifts were a "total prestation" as they were not simple, alienable commodities to be bought and sold, but like the "Crown jewels" embodied the reputation, history and sense of identity of a "corporate kin group", such as a line of kings. Given the stakes, Mauss asked "why anyone would give them away?" and his answer was an enigmatic concept, "the spirit of the gift". A good part of the confusion (and resulting debate) was due to a bad translation. Mauss appeared to be arguing that a return gift is given to keep the very relationship between givers alive; a failure to return a gift ends the relationship; and the promise of any future gifts. Based on an improved translate, Jonathan Parry has demonstrated that Mauss was arguing that the concept of a "pure gift" given altruistically only emerges in societies with a well-developed market ideology.
Rather than emphasize how particular kinds of objects are either gifts or commodities to be traded in restricted spheres of exchange, Arjun Appadurai and others began to look at how objects flowed between these spheres of exchange. They shifted attention away from the character of the human relationships formed through exchange and placed it on "the social life of things" instead. They examined the strategies by which an object could be "singularized" (made unique, special, one-of-a-kind) and so withdrawn from the market. A marriage ceremony that transforms a purchased ring into an irreplaceable family heirloom is one example whereas the heirloom, in turn, makes a perfect gift.
Although arithmetic has been used since the beginning of civilization to set prices, it was not until the 19th century that data was systematically collected and more advanced mathematical tools began to be used to study markets in the form of social statistics. Business intelligence is also dated to the 19th century, but it was with the rise of the computer that business analytics exploded. More recent techniques involve data mining and marketing engineering.
Market size can be given in terms of the number of buyers and sellers in a particular market or in terms of the total exchange of money in the market, generally annually (per year). When given in terms of money, market size is often termed "market value", but in a sense distinct from market value of individual products. For one and the same goods, there may be different (and generally increasing) market values at the production level, the wholesale level and the retail level. For example, the value of the global illicit drug market for the year 2003 was estimated by the United Nations to be US$13 billion at the production level, $94 billion at the wholesale level (taking seizures into account) and US$322 billion at the retail level (based on retail prices and taking seizures and other losses into account).