Editing Commodity

A '''commodity''' is a simple element of a [[service economy]] which performs only very predictable services, e.g. [[gasoline]] which only really burns up in a combustion engine.  This simplicity makes it possible to define it as an undifferentiated [[product]] whose market value arises from the owner's right to sell rather than the right to use. Example commodities from the financial world include [[oil]] (sold by the barrel), [[wheat]], bulk chemicals such as [[sulfuric acid]] and even [[pork belly|pork-bellies]].  More modern commodities include [[bandwidth]], [[RAM]] chips and (experimentally) computer processor cycles, and [[negative commodity]] units like [[emissions credit]]s.

In the original and simplified sense, ''commodities'' were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer are considered equivalent.  It is the [[contract]] and this underlying [[standard]] that define the [[commodity]], not any inherent quality of it as a living organism as such.  One can reasonably say that food commodities, for example, are defined by the fact that they substitute for each other in [[recipe]]s, and that one use the food without having to look at it too closely.

[[Wheat]] is an example.  Wheat from many different farms is pooled.  Generally, it is all traded at the same price; wheat from Joe's farm is not differentiated from wheat from Jane's farm.  Some uniform [[standard of quality]] must necessarily be assumed, leading to different pools:  one say for [[genetic modification|genetically modified wheat]], and one for not.  Failures to match the consumer's assessment of [[risk]], usefulness for some purpose, can lead to lower prices or the necessity of dividing the market into different pools - a very major issue in [[agricultural policy]].

If the division into pools is effective, [[commodity markets|markets for trading commodities]] can be very [[Economic efficiency|efficient]], they quickly respond to changes in [[supply and demand]] to find an [[equilibrium]] [[price]].  Producers often attempt to 'de-commodify' their products by [[branding]] them.  Branding attempts to make similar products from different producers more distinguishable.  This stategy can often lead to higher prices for the items than would be produced in a ''commodity'' market - making a [[product market]].  This is the logical consequence of splitting into one pool per [[brand name]].

[[Globalization]] has largely obsoleted this older "thing-based" definition, as the [[property right]] in that "thing", and [[standard of quality]] expected, and [[right to sue]] if it is not met, tends to vary widely across even the most [[developed nation]]s.  Accordingly there is now more emphasis on [[contract]], and on [[insurance]], and [[currency]] dynamics in modern [[commodity markets]].

Some [[economics|economists]] advise redefining every commodity and product market as a [[service market]], wherein state inspections, market regulation, property rights enforcement, and other services previously assumed under [[classical economics]] to be the domain of the state, could be charged for.  If this advice were followed, the term [[commodity]] would still apply in [[value of life|human life]] analysis, or narrow domains such as relatively safe food goods, or industrial inputs (oil, screws, wireless spectrum) where quality is more or less standard globally, and there is little risk to life of any failure.

===List of Commodities for which Commodity markets exist===
see [[List of commodity markets]]


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<small>Adapted from [[Wikipedia]] article [[w:Commodity]] under the clauses of [[GFDL]]</small>