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A place where transactions among agents take place, where an offer meets the demand, and the price of things is set.

Markets are means of (re-)distribution of goods and services in capitalism. They also serve as mechanisms of valuation (setting price for things) and allocation (signalling production based on demand and providing incentives). Markets play an important role in coordination and self-organization of capitalist economies (as opposed to planned economies -socialism or communism).

Well functioning markets suppose information symmetry among agents. Market failure refers to a problem in the capitalist production and (re-)distribution system.

Commons-based peer production relies more on stigmergy for coordination of co-production and dissemination of solutions (embodied as material products or as services through shared infrastructure like Bitcoin for example), which is a departure from capitalism. For example, in DIY (do it yourself) information propagates (designs, code) and physical production is done locally, by the user. The notion of scarcity, supply and demand does not apply.

Peer production is different from market economy: neither market pricing nor managerial command are required for P2P processes to make decisions regarding the allocation of resources. There are further differences:

  • Although markets exhibit stigmergic behaviour, i.e. to insect-like swarm intelligence, they mainly rely on price signalling as a coordination mechanism, which does not apply to all economic processes (ex. creation of scientific or technical knowledge, creation and distribution of art) and is insufficient for complex economic processes (ex. cannot express most externalities for example). * Another shortcoming of the market economy is that although there are autonomous agents in a distributed environment, each individual only sees their own immediate benefit.[6]
  • Markets are based on 'neutral' cooperation, and not on synergistic cooperation. Since market transactions do not create obligations, as they are fulfilled on the spot through payment, unless debt is used, they are not conducive to strengthening social relations.
  • Markets operate on the production and distribution of products (goods or services) through exchanges that are mediated by currency to generate profit, not production for use.
  • Whereas P2P aims at full participation, markets only fulfill the needs of those with purchasing power.

Markets do not function well for common needs that do not involve direct payment[6] (national defense, general policing, education and public health). In addition, they fail to take into account negative externalities[6] (the environment, social costs, future generations).

See also

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