Atomization

economic-dictionary

Atomization in the economy occurs when there is a highly fragmented market, where numerous agents (buyers and sellers) participate, none of which has the power to influence the market equilibrium by itself.

Atomization refers to the existence of a large number of buyers and sellers in the market. Each of them has a small size with respect to the total, so they do not have any influence in determining the market equilibrium quantity and price.

Atomization characteristics

The main characteristics of an atomized market are:

  1. The amount offered by each of the sellers in the market is very small in relation to the total supply. In this way, even when an agent substantially modifies its quantity supplied, there will be no significant effect on the market equilibrium.
  2. The buyers or demanders of products are very fragmented, what each agent buys individually is very small with respect to the total demanded. No buyer has purchasing power so he has no influence to negotiate / modify the prices he faces.
  3. Agents, bidders and demanders act independently. No groups or associations are formed that can gain influence in the market.
  4. All market agents take the prices they face in the market as given. If a bidder tries to sell at a higher than market price, no one will buy from him. If a buyer offers a lower than market price, no one will sell to him.

Atomization and perfect competition

For a market to be perfectly competitive, it is essential that the market be atomized. In this way, all agents compete independently knowing that their actions will not have any significant influence on the final outcome of the market.

Furthermore, since there are a large number of bidders, attempts to collude in order to increase their profits will be unsuccessful. On the sellers side, it is the same, the possibility of joining forces to influence purchase prices is hampered by the existence of a large number of agents, which makes coordination very difficult.

Atomization and marketing

The concept of atomization is also used in the area of ​​marketing. In this case it refers to market segmentation into many small target markets. The segmentation can be of small groups (for example, young people of certain characteristics) or even individual, where the product or service is tailored to the customer.

Tags:  bag other famous-phrases 

Interesting Articles

add