Some of the important factors under which the extent of market depends are as follows:

1. Nature of Demand:

The extent of the market is greatly influenced by the nature of the demand of the commodity.

The commodities like silver, gold etc. having permanent demand would have a larger size of the market. On the contrary, if the demand is limited to a particular area then it would have the small size of the market.

2. Means of Transportation and Communication:

Means of transportation and communication determine the extent of the market. If the means of transportation and communication are well developed, wide contacts can be easily established.

3. Nature of the Commodity:


The nature of commodity also influences the extent of the market. To have larger market, commodity must be durable, portable, etc. Perishable goods have narrow market. In case of perishable goods, extent of the market is small.

4. Currency and Credit:

The market can be conveniently carried to extensive areas only if the currency and credit system of the country is well developed, because only the good currency and credit policy can inspire the confidence of the people.

5. State Policy:

The state policy is another factor to influence the size of the market. If the Government imposes prohibitive duties and quotas, the size of the market would be narrow. Therefore, we may say that state policy has its effect on the size of the market.

6. Degree of Division of Labour:

The size of the market is also determined by the division of labour, if there exists greater division of labour, articles would be cheaper and the market would be wider.

7. Durability:


The extent of market of things, which do not perish quickly, that, is, durable and large. But the commodities such as fresh vegetables, milk, and eggs etc. which perish quickly have narrow extent of the market. These cannot be transported from one place to the other.

8. Portability:

The commodity which can be transported from one place to the other has large extent of market. But the things which are heavy and much expenditure is incurred on their transportation have limited extent of market. For example, bricks have a local market. If huge expenditure on its transport is made only then would it be carried to another place.

9. Sampling and Grading:

The commodities which can be sampled and graded have a large extent of market because customers place orders only on seeing sample or grade of such commodities. They do have not to go personally to see the commodities. For example, woolen cloth, fountain pen, electric fans etc. But if the products can neither be sampled nor graded, the customers have to see them personally. Therefore, their extent of market is limited.

10. Peace, Security and Honesty:

A trader will like to send his products to the country where peace and security exist. As a result, the extent of market will be large. But a place where there are unrest, poor law and order situation will not be liked by the businessmen. They will avoid sending their commodity to that place and there will be limited extent of the market.

11. Number of Substitutes:


The more number of substitutes of an article, the narrower the demand for it and extent of its market will become less because when a certain article is not available in the market or its price is high people will purchase an article similar to that and the substitute will serve their purpose.

12. Modern Methods of Trade:

The extent of market will depend on the modern methods of trade. By using the methods of propaganda, advertisement, storage etc. size of market expands.