Investments, tenth edition

   Types of Markets 

 We can differentiate four types of markets: direct search markets, brokered markets, dealer 

markets, and auction markets. 

  Direct Search Markets   

A  direct search market  is the least organized market.  Buyers 

and sellers must seek each other out directly. An example of a transaction in such a market 

is the sale of a used refrigerator where the seller advertises for buyers in a local newspaper 

or on Craigslist. Such markets are characterized by sporadic participation and low-priced 

and nonstandard goods. Firms would find it difficult to profit by specializing in such an 

environment.  

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6/18/13   7:44 PM

6/18/13   7:44 PM

Final PDF to printer

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64  P A R T  

I

 Introduction