This section is offered as an ontological aside to explain, in part, what we mean when we talk about the market in Marshallian theory. Again, in our previous Walrasian/Paretian theoretic approach this problem is reasoned away entirely by subsuming all markets within a spatio-temporally integrated system in which an all-encompassing rationalistic logic (tâtonnement) strictly governs the evolution of the system and defines its ontological dimensions, to the extent that these are even up for discussion. As a construction of rigorous empiricist epistemological principles, Marshallian theory cannot reason away the space and time of markets. It absolutely has to come to terms with the particular ways in which real economic actors negotiate ontological complexities in order to produce, exchange, and consume goods and services.
For our present purposes, we can abstract from the problem of time, limiting our present inquiry to the theoretic short run. However, we still need to resolve the problem of market space, a conception that is being rendered more complex as real economies assume a more fully global scale of operations. Moreover, we need to specify certain conceptual conditions governing the unity of market and establishing potential cleavages separating distinct markets. Emphatically, the goods and/or services that exchange in individual markets must, by definition, be homogeneous in character. In the absence of homogeneity, pricing mechanisms would have to account for qualitative differences between goods and/or services being exchanged that would otherwise impact competition between suppliers, inhibiting uniform competitive pricing. Effectively, we would be forced to adopt some sort of hedonic pricing methodology that could track qualitative differences between goods or services offered by different firms, where each of the goods or services being exchanged constitutes a near perfect substitute for those offered by other firms.
Beyond homogeneity of the commodities exchanged, we require a relatively broad diffusion of information on the commodities themselves and the firms offering them to participating consuming agents. The wider the transmission of information on products, pricing, and other relevant transaction details, the more geographically expansive will be the market. Ancillary to the issue of information diffusion, we need to consider how technologies enable the assemblage of information by both producing and consuming agents. The extent to which agents on both sides of the market are able to consolidate buying and selling information determines the extent to which the market will approach perfect competition. In the limit, as information becomes perfectly distributed among all buyers and sellers (barring institutional barriers to entry into markets), we approach a state of perfect competition analogous to a Walrasian/Paretian general equilibrium system. It will remain, however, my contention that markets consistent with Marshallian partial equilibrium analysis never realize this degree of information diffusion. Rather, limitations on the diffusion of information critically define the boundaries between market structures.
For Marshallian theory, the conceptual boundaries of the market are ultimately grounded in the capacity to achieve a single equilibrium price toward which all individual prices for the commodity in exchange tend to approach. In this respect, any aggregation of buyers and sellers, however geographically concentrated or dispersed, assembled to transact exchanges of a single, relatively homogeneous good or service in which the price of the commodity approaches a single value across all exchanges, must be labeled a single market. Part of the problem delineating conceptual boundaries here may arise from the connections between market exchanges and concomitant production processes manifest in the notion of a supply chain. Market prices and quantities must be shaped, to a significant degree, by preceding production and exchange processes, at least as much as they are shaped by competition between suppliers and consumers within a given discrete market. Notwithstanding, there must be some sorts of determinate spatial connections unifying agents at the temporal instance of an exchange, and these need to be specified to define what we mean by the space of a market. That is to say, the space of a market is, by definition, determined by the processes of negotiation and exchange between buying and selling parties, whether or not the prices, quantities, and other transaction details are shaped by exogenous processes.
In his Principles of Economics (8th edition(1920), Book V, Chapter 1. London: Macmillan and Company, Ltd, located at: http://www.econlib.org/library/Marshall/marP28.html#Bk.V,Ch.I. Henceforth: Marshall (1920)), Marshall clearly emphasized the centrality of communications technologies in establishing a singular equilibrium market price. Referencing technologies in place when the Principles were initially published in 1890, Marshall noted that "the general tendency of the telegraph, the printing press and steam traffic is to extend the area over which (equilibrating) influences act and increase their force." Thus, he further argues that, in the case of commodities that are relatively portable, non-perishable, and in general demand across all geographically defined economies, the advance of telecommunications technologies must enforce a tendency of price equilibration across all sites in which the commodity is exchanged, a tendency that makes rare metals, in particular, logical sources of commodity money. He, likewise, discounts the effects of transportation costs and customs boundaries as impediments to the force of competition between buyers and sellers across certain key commodity markets, again, characterized by portability and non-perishability.
Pricing mechanisms in contexts where commodities are relatively perishable and/or non-portable demonstrate much more geographical variability. Incapacity to transport goods from place to place becomes a key impediment to the uniformity of prices across regions, transcending informational concerns even as communications technologies enable continuous, real-time information on quantities supplied and demanded between regions. Consequently, as goods become relatively non-portable or transportation costs become a significant constraint on portability, market boundaries arise between geographic regions. Conversely, every technological advance in transportation and/or, in the case of perishable goods, storage capacities, must expand market boundaries, constituting, in the limit, globally scaled markets. Thus, at the start of the Nineteenth century, cereal grain markets on the East coast of the US were relatively localized, defined by the capacities of farmers to bring wheat, corn, and/or milled flour into seaboard towns by horse cart. By the 1830s, the market was expanded by the presence of aquatic transportation infrastructure investments (e.g. barge canals), connecting the East coast to better, more productive arable land in Trans-Appalachia (Ohio, Michigan, Indiana). As a result, cereal grain prices declined in coastal cities and became more uniform across formerly distinct regional markets. Today, American markets for perishable produce may include oranges from South Africa, asparagus from Peru, and red peppers from the Netherlands, even as, a generation ago, the seasonal availability of produce within discrete American regional markets (i.e. metropolitan areas) or across regions within the larger geographical space of North America constituted definite constraints on the availability of certain categories of produce. Such changes can be accounted for, in part, through transportation advances and, additionally, through technological advances on the genetic engineering of agricultural produce, rendering it relatively less perishable as it travels eight to ten thousand miles to market.
In the limit, as technology annihilates the geographic boundaries constituting regional markets to impose a single, competitive equilibrium market price, we are confronted with the potential for perfect competition, through which all firms must conform to a zero profit condition as they exhaust all available mechanisms to reduce costs and attract consumers. The problem here remains, however, the universality of access to information on pricing and quantities supplied and demanded at divergent points across geographic space. In a Walrasian/Paretian economy, information is always distributed perfectly across household agents on the producer and consumer sides of all markets. In Marshallian theory, we lack such a perfect distribution of information. On the contrary, we face the reality that agents approach markets with divergent capacities to accumulate information on quantities and pricing. As such, price competition exerts an uneven influence, even within geographically compact market spaces. Is it reasonable to expect that a shirt, with relatively homogeneous design and qualitative characteristics, should sell at exactly the same price between multiple retail outlets in a large shopping mall? It will only if consumers and suppliers are fully cognizant of the availability of a virtually identical product at multiple retailers in the same compact retail market space and consumers are willing to enforce a common minimum price across all suppliers by purchasing identical products only at the minimum available price.
This consideration of the conceptual boundaries of the market in regard to the enforcement of a single equilibrium market price must simultaneously exist in conjunction with the presence of diverse technological/communications vehicles through which information on prices and quantities can be communicated across space among consuming and supplying agents. Such communicative means both enable firms to harmonize their production and pricing strategies in relation to competitors and estimated consumer reservation prices, and enable consumers to make purchasing decisions in relation to the offer prices of diverse firms. By communications vehicles, I mean to include everything from person-to-person "word of mouth" between suppliers and/or consumers to professional marketing campaigns to accumulated information derived from electronic social media (e.g. internet bulletin boards). Emphatically, every conceivable means by which agents are enabled to collect information on pricing and quantities across multiple supplying firms providing relatively homogeneous commodities must be included within the communications vehicles associated with a particular firm or across firms constituting a market. As such, the real space of a market may include both the physical space of exchange sites (e.g. retail outlets) and the virtual spaces of electronic marketplaces, each shaped by the particular range of communications technologies by which buyers and sellers transmit information and negotiate the terms of exchange.
Physically speaking, our understanding of the spatiality of markets must incorporate some consideration of the spatial footprints of material processes of exchange and, especially in regard to services, of production and consumption. Where do agents on both sides of the market actually transact the contractual details of the deal, where are media of exchange (i.e. currency) transferred between transacting parties, and do the processes of production and consumption occur simultaneously and in a co-located space? All of these processes must occur in real physical space in so far as all of the agents are real human agents, occupying, transiting through, and interacting within real physical space, even if two agents are separated by thousands of miles across an intervening virtual/electronic medium. It may quite often be the case that exchanges occur with prices that are determined before transacting parties ever come together, especially if the market is quite large and the commodity exchanged quite homogeneous. However, if we want to come to a more generalized consideration of the spatiality of the market as an institution through which two parties engage in a contractual exchange, then we have to consider all the potential spatial contexts through which such an exchange may be formalized and actualized.
For Marshallian theory, the conceptual boundaries of the market are ultimately grounded in the capacity to achieve a single equilibrium price toward which all individual prices for the commodity in exchange tend to approach. In this respect, any aggregation of buyers and sellers, however geographically concentrated or dispersed, assembled to transact exchanges of a single, relatively homogeneous good or service in which the price of the commodity approaches a single value across all exchanges, must be labeled a single market. Part of the problem delineating conceptual boundaries here may arise from the connections between market exchanges and concomitant production processes manifest in the notion of a supply chain. Market prices and quantities must be shaped, to a significant degree, by preceding production and exchange processes, at least as much as they are shaped by competition between suppliers and consumers within a given discrete market. Notwithstanding, there must be some sorts of determinate spatial connections unifying agents at the temporal instance of an exchange, and these need to be specified to define what we mean by the space of a market. That is to say, the space of a market is, by definition, determined by the processes of negotiation and exchange between buying and selling parties, whether or not the prices, quantities, and other transaction details are shaped by exogenous processes.
In his Principles of Economics (8th edition(1920), Book V, Chapter 1. London: Macmillan and Company, Ltd, located at: http://www.econlib.org/library/Marshall/marP28.html#Bk.V,Ch.I. Henceforth: Marshall (1920)), Marshall clearly emphasized the centrality of communications technologies in establishing a singular equilibrium market price. Referencing technologies in place when the Principles were initially published in 1890, Marshall noted that "the general tendency of the telegraph, the printing press and steam traffic is to extend the area over which (equilibrating) influences act and increase their force." Thus, he further argues that, in the case of commodities that are relatively portable, non-perishable, and in general demand across all geographically defined economies, the advance of telecommunications technologies must enforce a tendency of price equilibration across all sites in which the commodity is exchanged, a tendency that makes rare metals, in particular, logical sources of commodity money. He, likewise, discounts the effects of transportation costs and customs boundaries as impediments to the force of competition between buyers and sellers across certain key commodity markets, again, characterized by portability and non-perishability.
Pricing mechanisms in contexts where commodities are relatively perishable and/or non-portable demonstrate much more geographical variability. Incapacity to transport goods from place to place becomes a key impediment to the uniformity of prices across regions, transcending informational concerns even as communications technologies enable continuous, real-time information on quantities supplied and demanded between regions. Consequently, as goods become relatively non-portable or transportation costs become a significant constraint on portability, market boundaries arise between geographic regions. Conversely, every technological advance in transportation and/or, in the case of perishable goods, storage capacities, must expand market boundaries, constituting, in the limit, globally scaled markets. Thus, at the start of the Nineteenth century, cereal grain markets on the East coast of the US were relatively localized, defined by the capacities of farmers to bring wheat, corn, and/or milled flour into seaboard towns by horse cart. By the 1830s, the market was expanded by the presence of aquatic transportation infrastructure investments (e.g. barge canals), connecting the East coast to better, more productive arable land in Trans-Appalachia (Ohio, Michigan, Indiana). As a result, cereal grain prices declined in coastal cities and became more uniform across formerly distinct regional markets. Today, American markets for perishable produce may include oranges from South Africa, asparagus from Peru, and red peppers from the Netherlands, even as, a generation ago, the seasonal availability of produce within discrete American regional markets (i.e. metropolitan areas) or across regions within the larger geographical space of North America constituted definite constraints on the availability of certain categories of produce. Such changes can be accounted for, in part, through transportation advances and, additionally, through technological advances on the genetic engineering of agricultural produce, rendering it relatively less perishable as it travels eight to ten thousand miles to market.
In the limit, as technology annihilates the geographic boundaries constituting regional markets to impose a single, competitive equilibrium market price, we are confronted with the potential for perfect competition, through which all firms must conform to a zero profit condition as they exhaust all available mechanisms to reduce costs and attract consumers. The problem here remains, however, the universality of access to information on pricing and quantities supplied and demanded at divergent points across geographic space. In a Walrasian/Paretian economy, information is always distributed perfectly across household agents on the producer and consumer sides of all markets. In Marshallian theory, we lack such a perfect distribution of information. On the contrary, we face the reality that agents approach markets with divergent capacities to accumulate information on quantities and pricing. As such, price competition exerts an uneven influence, even within geographically compact market spaces. Is it reasonable to expect that a shirt, with relatively homogeneous design and qualitative characteristics, should sell at exactly the same price between multiple retail outlets in a large shopping mall? It will only if consumers and suppliers are fully cognizant of the availability of a virtually identical product at multiple retailers in the same compact retail market space and consumers are willing to enforce a common minimum price across all suppliers by purchasing identical products only at the minimum available price.
This consideration of the conceptual boundaries of the market in regard to the enforcement of a single equilibrium market price must simultaneously exist in conjunction with the presence of diverse technological/communications vehicles through which information on prices and quantities can be communicated across space among consuming and supplying agents. Such communicative means both enable firms to harmonize their production and pricing strategies in relation to competitors and estimated consumer reservation prices, and enable consumers to make purchasing decisions in relation to the offer prices of diverse firms. By communications vehicles, I mean to include everything from person-to-person "word of mouth" between suppliers and/or consumers to professional marketing campaigns to accumulated information derived from electronic social media (e.g. internet bulletin boards). Emphatically, every conceivable means by which agents are enabled to collect information on pricing and quantities across multiple supplying firms providing relatively homogeneous commodities must be included within the communications vehicles associated with a particular firm or across firms constituting a market. As such, the real space of a market may include both the physical space of exchange sites (e.g. retail outlets) and the virtual spaces of electronic marketplaces, each shaped by the particular range of communications technologies by which buyers and sellers transmit information and negotiate the terms of exchange.
Physically speaking, our understanding of the spatiality of markets must incorporate some consideration of the spatial footprints of material processes of exchange and, especially in regard to services, of production and consumption. Where do agents on both sides of the market actually transact the contractual details of the deal, where are media of exchange (i.e. currency) transferred between transacting parties, and do the processes of production and consumption occur simultaneously and in a co-located space? All of these processes must occur in real physical space in so far as all of the agents are real human agents, occupying, transiting through, and interacting within real physical space, even if two agents are separated by thousands of miles across an intervening virtual/electronic medium. It may quite often be the case that exchanges occur with prices that are determined before transacting parties ever come together, especially if the market is quite large and the commodity exchanged quite homogeneous. However, if we want to come to a more generalized consideration of the spatiality of the market as an institution through which two parties engage in a contractual exchange, then we have to consider all the potential spatial contexts through which such an exchange may be formalized and actualized.
Approaching such an analysis of the spatiality of the exchange process, I would contend that we encounter, in most circumstances, a hybrid articulation of physical and virtual spaces, combining to constitute a network, approximately in the sense advanced by actor network theory (i.e. agents performing actions at given places and times, actively distributed across space and time through technological vehicles). The operative principle governing the market, in this manner, becomes interpersonal communication across space and, probably, time mediated through communications technologies. At certain times and in certain spatial/social contexts, such communications might have been mediated by rudimentary vehicles (e.g. direct face-to-face bargaining between buyers and sellers), but, over time, the communications vehicles have become more complex, even if the terms of negotiation have been truncated by the influence of other actors (e.g. accumulation of information on prices offered by other firms or other consumers).
If the market is a network, then, spatially, it must be innately discontinuous, characterized geographically by sets of nodes, representing the spatiality of buyers and sellers, coming together simultaneously by means of some communications technology or in diverse temporal sequences, reflecting the capacities of particular communications technologies to store information on pricing and quantities for prolonged periods until exchange processes can be actualized. That is to say, the particular nodes constituting the network possess a spatial footprint that only combines with other nodes when particular technological vehicles are deployed to accumulate information, advance offers, convey decisions, and transfer exchange media in multiple directions. The articulation of the network may exist in a continuous state of flux, as agents enter and exit, and the temporal continuity of the network, per se, can only be actualized to the extent that agents remain, at their particular nodes, actively performing exchange. It is the action of exchange, in itself, which actualizes the market. Outside of the exchange process, the market ceases to exist even if the communications vehicles remain to store information for exchanges that may occur at some unknown moment in the future. To the extent that firms exist with inventories ready to be sold at a set of stipulated (or negotiable) prices, the market may remain a potentiality that can only be realized when a buyer comes along a agrees to enter into exchange at existing prices (or to renegotiate).
Before I conclude this section, I want to advance some additional conceptual and/or geo-spatial problems that enter into this Marshallian experiential/networked conception of markets. First, the forms of competition or non-competition must impact the degree to which there is a multi-directional flow of information on supplier offer prices and consumer reservation prices, but such a truncation of information flows will not necessarily impact the spatial articulation of the network. That is to say, if the market is characterized by qualitative/monopolistic competition, monopoly, or oligopoly, then the flow of information on offer prices from firms may be restricted by the limited nature of competition, but the spatial articulation of buyers and sellers may remain unchanged in relation to the articulation of a relatively competitive network. The logic here resides in the relative independence of processes through which consumer demand is produced as a function of individual utility maximization in relation to the potential for consolidation of production/restriction of competition among suppliers. Conclusively, the capacity to maintain a competitive market arises, on the one hand, from the relative homogeneity of the product exchanged and, on the other hand, to the informational and technological barriers to entry for potential new firms within discrete regional and/or global markets. These issues are at least partially distinct from the question of how many consumers will enter the market.
Second, certain matters on social context might be construed as pertinent to our larger conception of market spatiality. Notably, is the degree of urbanization pertinent to the question of market expansiveness? To answer this question, we would have to explicitly define urbanization and the relationship of urbanization to the scale and/or network connectivity of market institutions. This document is not the place for an extensive discourse on the nature of urbanization or to contemplate the conditions that transfer a social context from non-urban into urban. However, it will help to advance a tentative proposition on the nature of the urban in relation to our theorization of market spatiality and, especially, the idea of markets as networks. Pointedly, the urban can be understood as a particular condition in the network articulation of multiple overlapping layers of social processes in which technologies enable network transmissions to speed up, slow down, shorten, or lengthen. In the terminologies of communications networks, urban places operate as hubs, receiving network transmissions and transforming them to facilitate their reception at terminal nodes. In science fiction terms, urban spaces are like transporter/teleportation machines, transforming the ways in which goods, services, and information move. As such, the urban critically implies the centrality of the urban place/city as a constitutive element within an interurban network, articulated through multiple interconnected hubs such that network transmissions invariably occur through the space of hubs. This capacity to regulate network communications processes makes urban places important to social theories, in general, and to our theory of the market, in particular.
If we accept this proposition regarding the definition of the urban, then our conception of urban market processes must involve exchange processes associated with proximity to hubs, through which network transmissions can be made to shorten, lengthen, speed up, or slow down. Conversely, non-urban market processes must involve exchange processes within strictly self-contained networks, where exchanges operate on a strict point-to-point basis not mediated by hubs that can speed up, slow down, shorten, or length communications. As such, urban market processes involve a different range of communications technological vehicles than non-urban market processes. To the extent that we accept such a dichotomy between urban and non-urban markets, we have a foundational concept for interregional market processes and, in the limit, for global market activity. Market globalization is a phenomenon driven by the existence of urban markets as transitional hubs, sites where goods and services in exchange and the means of circulation to pay for them speed up or slow down between the terminal nodes where buyers and sellers reside.
Furthermore, if we accept an axiomatic connection between the urban and long distance communications media, such that market processes over relatively long distances must extend through urban spaces, then it may be worth asking whether the urban market is a terminal condition in the evolution of market activity, as markets stretch to longer and longer distances across geographic space. What forces might impede the encroachment of long distance media on relatively localized market activity or otherwise promote the re-localization of markets that had previously extended much longer distances across geographic space? A partial answer to this question must be afforded by the diffusion of communications technologies, facilitating information flow across space. It must, likewise, take the degree of price competition within individual, regional markets and, hence, the strategies of local firms to prevent market penetration by outside potential competitors. In short, the relatively urban and non-urban character of market activity (and, thus, the sustainability of regional market boundaries against the tendency of globalization) is shaped by the same forces that we have discussed over the course of this section.
Attempting to summarize the arguments advanced in this section:
1. Markets conceptually require the relative homogeneity of goods and services exchanged. If absolute homogeneity does not exist, then we need some hedonic pricing methodology to comprehend how seemingly distinct goods and services are unified by a common institution generating equilibrium pricing through competition.
2. The geographic expansiveness of market space is determined, in part, by the diffusion of information on pricing and quantities among buyers and sellers, which, in turn, is shaped by the range of communications technology vehicles available to diffuse and assemble information for supplying and consuming agents.
3. Goods and services that are relatively portable and non-perishable/non-degradable across geographic space will tend to have more geographically expansive market spaces than goods and services that are relatively non-portable and/or perishable/degradable. In the case of the latter, markets may be more geographically compact at a given moment, but technological change in transportation/transmission and storage may expand the geography of such markets over time.
If the market is a network, then, spatially, it must be innately discontinuous, characterized geographically by sets of nodes, representing the spatiality of buyers and sellers, coming together simultaneously by means of some communications technology or in diverse temporal sequences, reflecting the capacities of particular communications technologies to store information on pricing and quantities for prolonged periods until exchange processes can be actualized. That is to say, the particular nodes constituting the network possess a spatial footprint that only combines with other nodes when particular technological vehicles are deployed to accumulate information, advance offers, convey decisions, and transfer exchange media in multiple directions. The articulation of the network may exist in a continuous state of flux, as agents enter and exit, and the temporal continuity of the network, per se, can only be actualized to the extent that agents remain, at their particular nodes, actively performing exchange. It is the action of exchange, in itself, which actualizes the market. Outside of the exchange process, the market ceases to exist even if the communications vehicles remain to store information for exchanges that may occur at some unknown moment in the future. To the extent that firms exist with inventories ready to be sold at a set of stipulated (or negotiable) prices, the market may remain a potentiality that can only be realized when a buyer comes along a agrees to enter into exchange at existing prices (or to renegotiate).
Before I conclude this section, I want to advance some additional conceptual and/or geo-spatial problems that enter into this Marshallian experiential/networked conception of markets. First, the forms of competition or non-competition must impact the degree to which there is a multi-directional flow of information on supplier offer prices and consumer reservation prices, but such a truncation of information flows will not necessarily impact the spatial articulation of the network. That is to say, if the market is characterized by qualitative/monopolistic competition, monopoly, or oligopoly, then the flow of information on offer prices from firms may be restricted by the limited nature of competition, but the spatial articulation of buyers and sellers may remain unchanged in relation to the articulation of a relatively competitive network. The logic here resides in the relative independence of processes through which consumer demand is produced as a function of individual utility maximization in relation to the potential for consolidation of production/restriction of competition among suppliers. Conclusively, the capacity to maintain a competitive market arises, on the one hand, from the relative homogeneity of the product exchanged and, on the other hand, to the informational and technological barriers to entry for potential new firms within discrete regional and/or global markets. These issues are at least partially distinct from the question of how many consumers will enter the market.
Second, certain matters on social context might be construed as pertinent to our larger conception of market spatiality. Notably, is the degree of urbanization pertinent to the question of market expansiveness? To answer this question, we would have to explicitly define urbanization and the relationship of urbanization to the scale and/or network connectivity of market institutions. This document is not the place for an extensive discourse on the nature of urbanization or to contemplate the conditions that transfer a social context from non-urban into urban. However, it will help to advance a tentative proposition on the nature of the urban in relation to our theorization of market spatiality and, especially, the idea of markets as networks. Pointedly, the urban can be understood as a particular condition in the network articulation of multiple overlapping layers of social processes in which technologies enable network transmissions to speed up, slow down, shorten, or lengthen. In the terminologies of communications networks, urban places operate as hubs, receiving network transmissions and transforming them to facilitate their reception at terminal nodes. In science fiction terms, urban spaces are like transporter/teleportation machines, transforming the ways in which goods, services, and information move. As such, the urban critically implies the centrality of the urban place/city as a constitutive element within an interurban network, articulated through multiple interconnected hubs such that network transmissions invariably occur through the space of hubs. This capacity to regulate network communications processes makes urban places important to social theories, in general, and to our theory of the market, in particular.
If we accept this proposition regarding the definition of the urban, then our conception of urban market processes must involve exchange processes associated with proximity to hubs, through which network transmissions can be made to shorten, lengthen, speed up, or slow down. Conversely, non-urban market processes must involve exchange processes within strictly self-contained networks, where exchanges operate on a strict point-to-point basis not mediated by hubs that can speed up, slow down, shorten, or length communications. As such, urban market processes involve a different range of communications technological vehicles than non-urban market processes. To the extent that we accept such a dichotomy between urban and non-urban markets, we have a foundational concept for interregional market processes and, in the limit, for global market activity. Market globalization is a phenomenon driven by the existence of urban markets as transitional hubs, sites where goods and services in exchange and the means of circulation to pay for them speed up or slow down between the terminal nodes where buyers and sellers reside.
Furthermore, if we accept an axiomatic connection between the urban and long distance communications media, such that market processes over relatively long distances must extend through urban spaces, then it may be worth asking whether the urban market is a terminal condition in the evolution of market activity, as markets stretch to longer and longer distances across geographic space. What forces might impede the encroachment of long distance media on relatively localized market activity or otherwise promote the re-localization of markets that had previously extended much longer distances across geographic space? A partial answer to this question must be afforded by the diffusion of communications technologies, facilitating information flow across space. It must, likewise, take the degree of price competition within individual, regional markets and, hence, the strategies of local firms to prevent market penetration by outside potential competitors. In short, the relatively urban and non-urban character of market activity (and, thus, the sustainability of regional market boundaries against the tendency of globalization) is shaped by the same forces that we have discussed over the course of this section.
Attempting to summarize the arguments advanced in this section:
1. Markets conceptually require the relative homogeneity of goods and services exchanged. If absolute homogeneity does not exist, then we need some hedonic pricing methodology to comprehend how seemingly distinct goods and services are unified by a common institution generating equilibrium pricing through competition.
2. The geographic expansiveness of market space is determined, in part, by the diffusion of information on pricing and quantities among buyers and sellers, which, in turn, is shaped by the range of communications technology vehicles available to diffuse and assemble information for supplying and consuming agents.
3. Goods and services that are relatively portable and non-perishable/non-degradable across geographic space will tend to have more geographically expansive market spaces than goods and services that are relatively non-portable and/or perishable/degradable. In the case of the latter, markets may be more geographically compact at a given moment, but technological change in transportation/transmission and storage may expand the geography of such markets over time.
4. The defining characteristic of an individual market is the presence of a unique equilibrium price toward which prices for competing firms offering relatively homogeneous goods and services tend to approach.
5. The maintenance of a single equilibrium price in a given market space demands the presence of communications technological vehicles, capable of diffusing information on prices and quantitative offers from individual firms and reservation prices from consumers. Some of these vehicles may be relatively rudimentary, functioning only in the immediate vicinity of sellers, while other may be technologically advanced, stretching the discontinuous space of markets out of thousands of miles on an instantaneous time frame of information transfers.
6. Every assemblage of buying and selling agents, connected by communications technologies, constitutes the market as a network, possibly articulated entirely in real physical space, possibly articulated as a hybrid of physical and virtual space. As a rule, such networks are spatially discontinuous, connecting agents by means of communications technologies physically separated by real, physical non-market spaces.
7. The spatial articulation of the market, constituted by transfers of information between buying and selling agents, is not necessarily affected by the competitive nature of the market, which simply impacts the number of selling agents and the capacity for reduction of equilibrium prices to levels that might be obtained in relatively competitive markets.
8. The characterization of urban markets reflects proximity to technological means for accelerated/long-distance communications, constituting a particular physical location as a network hub, facilitating connections between physically distanciated buying and selling nodes. We define such hubs as urban spaces. Non-urban markets achieve information transfers between buying and selling agents in the absence of intervening network hubs.
7. The spatial articulation of the market, constituted by transfers of information between buying and selling agents, is not necessarily affected by the competitive nature of the market, which simply impacts the number of selling agents and the capacity for reduction of equilibrium prices to levels that might be obtained in relatively competitive markets.
8. The characterization of urban markets reflects proximity to technological means for accelerated/long-distance communications, constituting a particular physical location as a network hub, facilitating connections between physically distanciated buying and selling nodes. We define such hubs as urban spaces. Non-urban markets achieve information transfers between buying and selling agents in the absence of intervening network hubs.
