Close Market vs Open Market
Closed market and open market are not physical entities that one can hope to see in real world. In fact these are terms used to refer to situations in countries, especially economies that pertain to markets. When the market is such that all have access to it and there is no restriction or eligibility criteria introduced to restrain people from carrying out transactions in it, the situation is called an open market situation. On the other hand, there are protected markets where it is not possible for everyone to participate or carry out transactions. This may be done to deliberately keep some players out of the market, or may be a case where entry criteria are high or difficult to attain making some economic actors sit out of the market.
Protectionism is the term that is being applied to conditions that are created to restrain some players from entering the market. These conditions are mostly in the form of trade barriers, taxes, levies, duties that may look proper on ground but are often introduced on flimsy grounds. It is hard to classify a market as an open market or a closed market but economists have their own interpretations according to which they judge the openness or lack of it in a market. There are markets that have almost draconian government regulation keeping out many economic actors they deem to be harmful for the economy.
Scope or level of competition and the level to which local traditions and norms allow outsiders to do trade are other criteria that are applied by economists to check the openness of a market. Though it is easy to talk of a totally free market, in reality there are very few such markets that allow free and easy access to all and sundry. One such example of a free or open market is European Union that allows free access to all members of EU and there are no restrictions whatsoever. However, if you are from any other country or lack sufficient funds, you may find that entering even such an open market is not all that easy as it sounds. This really puts a question mark on absolute openness and means that it is hard to find a truly open market. This is why instead of open market, a new term called free competition is being coined which is nothing but a euphemism.
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In brief: Close Market vs Open Market • If the market conditions are such that all economic actors have free access to participate, it is called an open market • In contrast, a market where there are barriers in the form of duties and taxes is called a closed market or a condition referred to as protectionism • In reality, it is hard to find a truly open market which is why economists have opted for a new term which is free competition
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