Commerce is the large-scale organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered distribution and transfer of goods and services on a substantial scale and at the right time, place, quantity, quality and price through various channels from the original producers to the final consumers within local, regional, national or international economies.[1][2] The diversity in the distribution of natural resources, differences of human needs and wants, and division of labour along with comparative advantage are the principal factors that give rise to commercial exchanges.[3]
Although these concepts have many similarities and overlaps (to the extent that they are used as synonyms in many sources), commerce, business and trade can be distinguished from each other in some ways.
Business is the activity of earning money through engaging in commerce. Therefore, it is a commercial activity carried out to make a living.[8] Also business can be defined as an organization or activity typically operating in the primary (dealing with the extraction and sourcing of raw materials) and secondary sector (dealing with manufacturing intermediate or finished goods) of the economy whose goal is to sell raw materials or manufactured goods for profit. In the tertiary sector, there are businesses which sell services for profit. Commerce deals with the movement and distribution of raw materials as well as finished or intermediate (but valuable) goods and services from the manufacturers to the end customers on a large scale. It is not concerned with the extraction of raw materials and the manufacturing of goods.[9]
Commerce is distinguishable from trade as well. Trade is the transaction (buying and selling) of goods and services that makes a profit for the seller and satisfies the want or need of the buyer. When trade is carried out within a country, it is called home or domestic trade, which can be wholesale or retail. A wholesaler buys from the producer in bulk and sells to the retailer who then sells again to the final consumer in smaller quantities. Trade between a country and the rest of the world is called foreign or international trade, which consists of import trade and export trade, both being wholesale in general.
Commerce not only includes trade as defined above, but also the auxiliary services or aids to trade[4] and means that facilitate such trade. Auxiliary services aid trade by providing services which such as transportation, communication, warehousing, insurance, banking, credit financing to companies, advertising, packaging, and the services of commercial agents and agencies. In other words, commerce encompasses a wide array of political, economical, technological, logistical, legal, regulatory, social and cultural aspects of trade on a large scale. From a marketing perspective, commerce creates time and place utility by making goods and services available to the customers at the right place and at the right time by changing their location or placement.
Described in this manner, trade is a part of commerce and commerce is an aspect of business.
Commerce was a costly endeavor in the antiquities because of the risky nature of transportation, which restricted it to local markets. Commerce then expanded along with the improvement of transportation systems over time. In the Middle Ages, long-distance and large-scale commerce was still limited within continents. Banking systems developed in medieval Europe, facilitating financial transactions across national boundaries.[13]Markets became a feature of town life, and were regulated by town authorities.[14] With the advent of the age of exploration and oceangoing ships, commerce took an international, trans-continental stature.
Currently the reliability of international trans-oceanic shipping and mailing systems and the facility of the Internet has made commerce possible between cities, regions and countries situated anywhere in the world. In the 21st century, Internet-based electronic commerce (where financial information is transferred over Internet), and its subcategories such as wireless mobile commerce and social network-based social commerce have been and continue to get adopted widely.
Regulation
Legislative bodies and ministries or ministerial departments of commerce regulate, promote and manage domestic and foreign commercial activities within a country. International commerce can be regulated by bilateral treaties between countries. After the second world war and the rise of free trade among nations, multilateral arrangements such as the GATT and later the World Trade Organization became the principal systems regulating global commerce. The International Chamber of Commerce (ICC) is another important organization which sets rules and resolves disputes in international commerce.
Where national government bodies undertake commercial activity with or inside other states, this commercial activity may fall outside the protection of the international rules which govern legal relationships between independent states: see, for example, the "commercial activity exception" applicable under the United States' Foreign Sovereign Immunities Act of 1976.
^Bas Hooijmaaijers (2021), "China, the BRICS, and the limitations of reshaping global economic governance", The Pacific Review, 34 (1): 29–55, doi:10.1080/09512748.2019.1649298
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