Trade | Parties Involved in the Process of Trade

Written by Waseem Raza

Trade is the exchange of commodities between individuals or groups either directly through barter systems or indirectly through any medium such as money. It includes all the selling and buying activities within a country or across boundaries. It is the entire procedure of distributing the goods produced by different industries to their ultimate consumers. Hence, it removes the personal hindrance in the exchange of commodities.

Trade plays an important role in the production of goods and consumption of goods. Trad provides goods that are produced at some particular place to their end users according to their needs. The prime purpose of trade is to remove the hindrance of persons by bringing together producers and consumers who are widely scattered.

The role of the following parties in trade is very important:

  1. Producer
  2. Trader
  3. Consumer

1) Producer

Producer is a person who produces goods for selling them to the end users. He makes necessary arrangements to convert raw materials into finished or semi-finished goods. He generally sells his products through wholesalers and retailers in local and foreign markets and makes a profit from them.

2) Trader

A trader is a person who buys goods from producers or other traders and sells these goods to the end users or other merchants. His role as middleman serves as a bridge between producers and end users of goods.

3) Consumer/Customer

A consumer/Customer is a person who buys commodities or services for his personal use. He does not further sell commodities to other persons rather he satisfies his own desires and needs. This is the person for whom the whole process of trad is taken place.

Classification of Trade

Trade is classified into two broader categories according to the market in the following way:

(i) Home Trade/Domestic

(ii) Foreign Trade. Read more

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