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May 22, 2024 

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ARBITRAGE: Buying something in one market then immediately (or as soon as possible) selling it in another market for (hopefully) a higher price. Arbitrage is a common practice in financial markets. For example, an aspiring financial tycoon might buy a million dollars worth of Japanese yen in the Tokyo foreign exchange market then resell it immediately in the New York foreign exchange market for more than a million dollars. Arbitrage of this sort does two things. First, it often makes arbitragers wealthy. Second, it reduces or eliminates price differences that exist between two markets for the same good.

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SELLERS' MARKET:

A disequilibrium condition in a competitive market that has a shortage or excess demand. Because the quantity demanded is greater than the quantity supplied, sellers have the "upper hand" when negotiating. A sellers' market also goes by the more common term of shortage. The alternative to a sellers' market is a buyers' market, which has a surplus or excess supply.
A sellers' market exists because the quantity demanded by the buyers exceeds the quantity supplied by the sellers... at a given market price. In this situation, buyers seek to buy more of the good than sellers are willing to sell, hence sellers can pick and choose whom they sell to among prospective the buyers. Buyers are lucky to find a good to purchase.

Sellers' Market
A sellers' market is illustrated by the market for 8-track tapes displayed in this exhibit. This graph was generated with data from the 88th Annual Trackmania 8-Track Tape Collectors Convention at the Shady Valley Exposition Center.

Sellers have the "upper hand" in this market due to the excess demand of 8-track tapes. This shortage is indicated as the difference between the quantity demanded and the quantity supplied at the designated market price. In particular, the 30-cent price generates a quantity demanded of 600 tapes and a quantity supplied of 200 tapes. Buyers are willing and able to buy 400 tapes more than sellers are willing and able to sell. This excess demand of 400 tapes is what gives the sellers the upper hand.

Note that a sellers' market does not mean the lack of competition among suppliers have given some sellers market control. A sellers' market is a competitive market that simply has a temporary imbalance between the quantity demanded by the buyers and the quantity supplied by the sellers. A change in the market price would eliminate the sellers' market, and possibly even create a buyers' market.

<= SELLERS' EXPECTATIONS, SUPPLY DETERMINANTSERVICE =>


Recommended Citation:

SELLERS' MARKET, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: May 22, 2024].


Check Out These Related Terms...

     | buyers' market | excess demand | excess supply | surplus | market disequilibrium | disequilibrium price |


Or For A Little Background...

     | shortage | market | equilibrium | market equilibrium | equilibrium price | equilibrium quantity | competition | market clearing | voluntary exchange |


And For Further Study...

     | market equilibrium, numerical analysis | market equilibrium, graphical analysis | competitive market | self correction, market | competitive market | invisible hand | free enterprise | producer surplus |


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