Reinventing the Bazaar by John McMillan - Chapter 1

1. McMillan makes it clear that there are defining characteristics of a market. For one, he claims "A market for something exists if there are people that want to buy it and people that want to sell it," (p. 5). Buyers and sellers are a clear indication of a market system. McMillan states that there is a freedom involved in markets in regards to decision making and participation, though they are constrained in a sense of resources and rules.
    The voluntary exchanges between the two parties, or market transactions, are another characteristic of a market. Although many transactions, like unpaid work in the household, and those inside firms and the government, are outside of the market, they still shape the economy because they "take place within context of markets," (p. 7). With transactions, come costs. Money, time, and effort are few of the many transaction costs that are seen in a market.
    McMillan explains market design as "the methods of transacting and the devices that serve to allow transacting to proceed smoothly." The design is required to set structure to the market with rules, regulations, and definitions of various aspects of a market. He makes it clear that market design "does not control what happens in the market...it shapes and supports the process of transacting," (p. 9).

2. I have observed both positive and negative opinions of the economy. I know a few elders who have lost jobs and therefore lose faith in the economy and market system. Others I know that praise the market tend to be fairly wealthy. In my hometown, both are visible. The main road through the suburb is lined with stores, several of which have closed down recently, leading to negative views of the market. In a nearby suburb, there is an individual who is buying and remodeling several old buildings to enhance the town and start changing peoples views of the market. I'm not saying that income is a determinant of an individual's opinion on the market, but it may be a factor.
   I personally don't believe there is a clear side. Economics is not my strength, but I think there will always be ups and downs in a market, it's natural. The natural change in a market will lead people to have different views. I believe in order for a market to work well, there needs to be structure rather than no regulations at all.

3. I think rules are essential for modern markets. For one, government play an important role in setting standards for markets. They can set prices and manage money, so that markets are kept active. McMillan also explains that the government needs to be change rules to adapt to the constant technological advances. He gave and example of music online, which I believe without restrictions, the market for online music would be out of control. McMillan says that "Competition, while not a defining feature of a market, is usually present and adds to the autonomy," (p. 6). I think that competition is key in a market, because it causes firms to be conscious of pricing and restrains any one firm from dominating.