Final answer:
Potential markets can typically be divided into existing and incipient markets, with existing markets currently active and incipient markets representing emerging opportunities. Markets are essential for allocating resources and can vary in competitiveness, being influenced by globalization and expanded competition.
Step-by-step explanation:
Potential markets can be subdivided into existing and incipient markets. Existing markets consist of current buyers and sellers who are actively engaged in transactions, while incipient markets include potential segments that may emerge as future opportunities for businesses to enter.
Markets serve as critical mechanisms for allocating scarce resources, utilizing principles like international trade, demand, and supply. They operate under conditions where buyers and sellers act independently and engage in competition, they must be well informed about market conditions, and are free to enter or exit the market as they choose.
Moreover, it's important to note that markets can take various forms, including perfectly competitive markets, imperfectly competitive markets such as monopolistic competition, and markets under monopoly. For instance, monopolistically competitive markets feature a large number of competing firms selling similar, but not identical, products, and these markets are very common at the retail level.
The nature of markets is also evolving due to globalization, which has broadened the definition of markets due to increased competition from afar, adding complexity to the roles of antitrust authorities.