Posted in Finance, Accounting and Economics Terms, Total Reads: 315
Definition: Close Market
A close market is a market where supplier deals with only one agent directly and does not supply any others direct. In economics, a market which is not open to businesses from companies of other countries is known as closed market. So basically it is a market where foreign competitors are not allowed in.
This is the opposite of open market; here profit margins or spread is narrow.
In a Close market there is low spread between bid and offer prices, because there are many competing market makers which lead to high volume of trading. It happens because there is very small difference between the lowest price that the supplier wants to take and the highest price that the customer willing to pay for the product. This kind of market exists when there are multiple marketers in the market who work on the same security and trading is quite active.