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==Origin==
[http://nordan.daynal.org/wiki/index.php?title=English#ca._1100-1500_.09THE_MIDDLE_ENGLISH_PERIOD Middle English] commoditee, from Anglo-French commoditee, from [[Latin]] commoditat-, commoditas, from commodus. Going further back, the French word derived from the [[Latin]] commoditatem (nominative commoditas) meaning "fitness, [[adaptation]]". The [[Latin]] root commod- meant variously "appropriate", "proper [[measure]], time or condition" and "[[advantage]], benefit". Recently, many industry [[individuals]] have begun to identify workers compensation insurance as a commodity.
*[http://en.wikipedia.org/wiki/15th_century 15th Century]
==Definitions==
*1: an [[economic]] good: as a : a [[product]] of [[agriculture]] or mining
:b : an article of [[commerce]] especially when delivered for shipment <commodities futures>
:c : a mass-produced unspecialized product <commodity chemicals> <commodity memory chips>
*2a : something useful or valued <that valuable commodity [[patience]]>; also : [[thing]], [[entity]]
:b : convenience, [[advantage]]
*3: obsolete : [[quantity]], lot
*4: a good or [[service]] whose wide availability typically leads to smaller [[profit]] margins and diminishes the importance of [[factors]] (as brand name) other than price
*5: one that is subject to ready exchange or [[exploitation]] within a [[market]] <stars as [[individuals]] and as commodities of the [[film]] [[industry]] — Film Quarterly>
==Description==
A '''commodity''' is a good for which there is demand, but which is supplied without [[qualitative]] differentiation across a [[market]]. Commodities are often substances that come out of the [[earth]] and maintain roughly a [[universal]] price. A commodity has full or partial fungibility; that is, the market treats it as equivalent or nearly so no matter who produces it. Examples are [http://en.wikipedia.org/wiki/Petroleum petroleum] and [http://en.wikipedia.org/wiki/Copper copper]. The price of copper is [[universal]], and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many aspects of [[product]] [[differentiation]], such as the brand, the user [[interface]], the [[perceived]] [[quality]] etc. And, the more valuable a stereo is perceived to be, the more it will cost.
In [[contrast]], one of the characteristics of a commodity good is that its price is determined as a [[function]] of its [[market]] as a whole. Well-established [[physical]] commodities have actively traded [http://en.wikipedia.org/wiki/Spot_market spot] and [http://en.wikipedia.org/wiki/Derivative_(finance) derivative] markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
There is another important [[class]] of [[energy]] commodities which includes [[electricity]], gas, coal and oil. Electricity has the particular characteristic that it is either impossible or uneconomical to store, hence, [[electricity]] must be consumed as soon as it is produced.
[http://en.wikipedia.org/wiki/Commoditization Commoditization] (also called commodification) occurs as a [[goods]] or [[services]] market loses differentiation across its supply base, often by the [[diffusion]] of the [http://en.wikipedia.org/wiki/Intellectual_capital intellectual capital] [[necessary]] to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as [http://en.wikipedia.org/wiki/Generic_drug generic pharmaceuticals] and [http://en.wikipedia.org/wiki/Silicon_chip silicon chips].
There is a [[spectrum]] of commodification, rather than a binary distinction of "commodity versus differentiable product". Few products have complete undifferentiability and hence fungibility; even [[electricity]] can be differentiated in the [[market]] based on its [[method]] of generation (e.g., fossil fuel, wind, solar). Many products' [[degree]] of commodification depends on the buyer's [[mentality]] and means. For example, milk, eggs, and notebook paper are considered by many customers as completely undifferentiable and fungible; lowest price is the only deciding factor in the purchasing [[choice]]. Other customers take into [[consideration]] other factors besides price, such as [[environmental]] [[sustainability]] and animal welfare. To these customers, distinctions such as [[organic]]-versus-not or cage-free-versus-not count toward differentiating brands of milk or eggs, and percentage of recycled content or forestry council certification count toward differentiating brands of notebook paper. Larger [[considerations]] can enter these [[equations]], such as systemic socioeconomic unfairness (as [[poor]] people point out, "sure, it's easy to buy the expensive food when you've got plenty of money") and [[deception]] and [[authentication]] (e.g., a brand may [http://en.wikipedia.org/wiki/Greenwashing greenwash] its product and consumers lack [[practical]] ways to authenticate the claims).
[[Category: Economics]]
==Origin==
[http://nordan.daynal.org/wiki/index.php?title=English#ca._1100-1500_.09THE_MIDDLE_ENGLISH_PERIOD Middle English] commoditee, from Anglo-French commoditee, from [[Latin]] commoditat-, commoditas, from commodus. Going further back, the French word derived from the [[Latin]] commoditatem (nominative commoditas) meaning "fitness, [[adaptation]]". The [[Latin]] root commod- meant variously "appropriate", "proper [[measure]], time or condition" and "[[advantage]], benefit". Recently, many industry [[individuals]] have begun to identify workers compensation insurance as a commodity.
*[http://en.wikipedia.org/wiki/15th_century 15th Century]
==Definitions==
*1: an [[economic]] good: as a : a [[product]] of [[agriculture]] or mining
:b : an article of [[commerce]] especially when delivered for shipment <commodities futures>
:c : a mass-produced unspecialized product <commodity chemicals> <commodity memory chips>
*2a : something useful or valued <that valuable commodity [[patience]]>; also : [[thing]], [[entity]]
:b : convenience, [[advantage]]
*3: obsolete : [[quantity]], lot
*4: a good or [[service]] whose wide availability typically leads to smaller [[profit]] margins and diminishes the importance of [[factors]] (as brand name) other than price
*5: one that is subject to ready exchange or [[exploitation]] within a [[market]] <stars as [[individuals]] and as commodities of the [[film]] [[industry]] — Film Quarterly>
==Description==
A '''commodity''' is a good for which there is demand, but which is supplied without [[qualitative]] differentiation across a [[market]]. Commodities are often substances that come out of the [[earth]] and maintain roughly a [[universal]] price. A commodity has full or partial fungibility; that is, the market treats it as equivalent or nearly so no matter who produces it. Examples are [http://en.wikipedia.org/wiki/Petroleum petroleum] and [http://en.wikipedia.org/wiki/Copper copper]. The price of copper is [[universal]], and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many aspects of [[product]] [[differentiation]], such as the brand, the user [[interface]], the [[perceived]] [[quality]] etc. And, the more valuable a stereo is perceived to be, the more it will cost.
In [[contrast]], one of the characteristics of a commodity good is that its price is determined as a [[function]] of its [[market]] as a whole. Well-established [[physical]] commodities have actively traded [http://en.wikipedia.org/wiki/Spot_market spot] and [http://en.wikipedia.org/wiki/Derivative_(finance) derivative] markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
There is another important [[class]] of [[energy]] commodities which includes [[electricity]], gas, coal and oil. Electricity has the particular characteristic that it is either impossible or uneconomical to store, hence, [[electricity]] must be consumed as soon as it is produced.
[http://en.wikipedia.org/wiki/Commoditization Commoditization] (also called commodification) occurs as a [[goods]] or [[services]] market loses differentiation across its supply base, often by the [[diffusion]] of the [http://en.wikipedia.org/wiki/Intellectual_capital intellectual capital] [[necessary]] to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as [http://en.wikipedia.org/wiki/Generic_drug generic pharmaceuticals] and [http://en.wikipedia.org/wiki/Silicon_chip silicon chips].
There is a [[spectrum]] of commodification, rather than a binary distinction of "commodity versus differentiable product". Few products have complete undifferentiability and hence fungibility; even [[electricity]] can be differentiated in the [[market]] based on its [[method]] of generation (e.g., fossil fuel, wind, solar). Many products' [[degree]] of commodification depends on the buyer's [[mentality]] and means. For example, milk, eggs, and notebook paper are considered by many customers as completely undifferentiable and fungible; lowest price is the only deciding factor in the purchasing [[choice]]. Other customers take into [[consideration]] other factors besides price, such as [[environmental]] [[sustainability]] and animal welfare. To these customers, distinctions such as [[organic]]-versus-not or cage-free-versus-not count toward differentiating brands of milk or eggs, and percentage of recycled content or forestry council certification count toward differentiating brands of notebook paper. Larger [[considerations]] can enter these [[equations]], such as systemic socioeconomic unfairness (as [[poor]] people point out, "sure, it's easy to buy the expensive food when you've got plenty of money") and [[deception]] and [[authentication]] (e.g., a brand may [http://en.wikipedia.org/wiki/Greenwashing greenwash] its product and consumers lack [[practical]] ways to authenticate the claims).
[[Category: Economics]]