Open market

The term open market is used generally to refer to an economic situation close to free trade. In a more specific, technical sense, the term refers to interbank trade in securities.

In economic theory

Economists judge the "openness" of markets according to the amount of government regulation of those markets, the scope for competition, and the absence or presence of local cultural customs which get in the way of trade. In principle, a fully open market is a completely free market in which all economic actors can trade without any external constraint. In reality, few markets exist which are open to that extent, since they usually cannot operate without an enforceable legal framework for trade which guarantees security of property, the fulfillment of contractual obligations associated with transactions, and the prevention of cheating.

A physical open market is a space where anyone wishing to trade physical goods may do so free of selling charges and taxes, and has come to be regarded by many activists as the ultimate social enterprise and a major tool for tackling unemployment.

In a more general sense the term has started to be used in economics and political economy, in which an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market. This contrasts with a market closed by a monopoly which dominate an industry, and with a protected market in which entry is conditional on certain financial and legal requirements or which is subject to tariff barriers, taxes, levies or state subsidies which effectively prevent some economic actors from participating in them (see protectionism).

The concept of an open market in this general sense is sometimes criticized on the ground that participation in it is conditional on having sufficient money, income or assets.