"A market is the area of close competition
between firms or, putting it a little
differently, the field of rivalry between
them. (If there is no close competition there
is of course a monopolistic market). Within
the bounds of a market there is substitution -
substitution between one product and another,
and between one source of supply and another,
in response to changing prices. So a market
is the field of actual and potential
transactions between buyers and sellers
amongst whom there can be strong substitution,
at least in the long run, if given a
sufficient price incentive. Let us suppose
that the price of one supplier goes up. Then
on the demand side buyers may switch their
patronage from this firm's product to another,
or from this geographic source of supply to
another. As well, on the supply side, sellers
can adjust their production plans,
substituting one product for another in their
output mix, or substituting one geographic
source of supply for another. Whether such
substitution is feasible or likely depends
ultimately on customer attitudes, technology,
distance, and cost and price incentives.