Market Dynamics


DEFINITION of 'Market Dynamics'

The pricing signals that are created as a result of changing supply and demand levels in a given market. Market dynamics describes the dynamic, or changing, price signals that result from the continual changes in both supply and demand of any particular product or group of products. Market dynamics is a fundamental concept in supply, demand and pricing economic models.

BREAKING DOWN 'Market Dynamics'

Any change in either the supply or demand for a specific product or group of products forces a corresponding change in the other; these variances cause pricing signals.

In a free (open) market where no entity has the ability to influence or set price, the price of a good is determined by the market; that is, buyers and sellers, collectively. A single entity or group, therefore, is unable to have a significant effect on market dynamics.

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