The word “market” refers to a place to exchange goods or services; The same principle applies in the Jamaican real estate market. Producers (sellers) and consumers (buyers) need an intermediary to stimulate a healthy degree of activity in a trade. This is typical of homes in Negril Jamaica.
No matter what kind of political system controls an economy, every economy in every country in the world (and no different for Jamaican property) has to grapple with three basic questions:
1. What will be produced?
2. Who will do the production?
3. Who will get what is produced?
What will occur?
In a capitalist society, the free market mechanism, or price system, provides answers to these three basic questions. Under the price system, any producer can place a product or service on the market where it competes with similar products offered by other producers. Consumers evaluate the value, quality, and price of competing products and services. Consumer evaluation is very important in determining the value of homes in Negril, Jamaica, and matching demand with supply is critical in determining Jamaican property prices.
Products sold tell producers which products consumers prefer. Products that are not sold can no longer be produced at a profit and the profit is necessary for a producer to stay in business. So the answer to the basic question is: consumers really decide what will be produced. Those products unwanted by consumers produce little or no profit and will have to be replaced by new products for consumers to evaluate.
The answer to question number 1 also helps to find the answer to question number 2: Who will produce?
Who will do the production?
As an example, imagine that you are a producer of canned butter beans and you are competing in the market with four other producers of canned butter beans, all of similar quality and price. A complete analysis of your production methods and equipment reveals that a change in procedure will allow you to lower your price slightly below that of your competitors while maintaining product quantity and quality. Little by little thereafter, your product begins to be selected more and more frequently.
He decides to expand his factory and increase the amount of canned butter beans produced. Over time, other producers obviously must become more efficient, as you have, or face loss of business due to decreased sales and profits. Therefore, the answer to question 2 is: the most efficient producer of a product of comparable quality will make the production. A key concept when looking at Jamaican real estate is that better homes, in better locations, will command better prices. The houses in Negril Jamaica are an excellent example of this concept and provide empirical evidence that the type of house and location determines the price.
In a totalitarian or socialist society, the state plays the role of intermediary in a much more authoritarian way than in a democratic society. Whereas in the free enterprise system (within capitalist society) the wishes and decisions of the individual consumer are the main determinants, in a controlled economy, the state or representatives of the state make those decisions.
Furthermore, in the centrally planned or state economy (within socialist society), a committee or other state agency must inspect the national market to determine which goods and services are selling well and which should be withdrawn from the market. In the free enterprise system, the same results are automatically achieved by millions of individual consumer choices made every minute of every day. Those products that sell well will be replaced by more of the same. In addition, those producers that do not sell well will be eliminated and replaced by other producers. Therefore, there is an ‘automatic’ operation of the system.
Who will get what is produced?
In the free enterprise system, anyone can decide to produce televisions, for example, if they have the means. The producer who has accurately estimated the demand for televisions will make a profit. Other producers of items that don’t sell well may realize the profits made by the TV producer and decide to shift production at their plants and factories to more profitable TVs and thus become competitors for the buyer’s dollar.
Consumers willing to spend some of their available supply dollars will get the television of their choice. The answer to question number 3: those people who are willing to spend their money in the market will get what is produced. If more than one person wants the same item, the one willing to spend the most dollars usually gets to keep the item. We don’t worry about whether there will be enough televisions or cars to be allowed the privilege of buying one, as is the concern in communist states. We know there will be televisions and cars available. Our problem is to select the best product within the limits of our income.
Finally, a marketplace allows you to buy and sell products and services. But goods and services have no value in themselves. Only when consumers want them do they have value. Thus, the function of any market is to facilitate the exchange between buyers and sellers. The houses in Negril Jamaica are a true example of the concept of equilibrium market prices.
Same goes for Jamaican real estate, the market determines the selling prices, not the sellers or Jamaican real estate agents.