Stock exchange and local market

A question from Yahoo! Answers:

What similarities and differences exist between a stock exchange and a local market?

There are more differences that similarities, really…

A local market has no market makers; if no one brought broccoli today, there will be no broccoli in the market. Stock exchanges are designed to not let something like this happen; market makers always have every listed security in inventory and respond to supply/demand imbalances by changing prices at which they stand ready to deal.

Further, on a stock exchange, every participant is free to be either a buyer or a seller; in a local market, buyers enter for free while sellers have to rent space. So intraday speculation, which is easy on a stock exchange, is difficult in a local market.

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