Market tightness is a measure of the liquidity of a market.[1] High market tightness indicates relatively low liquidity and high transaction costs, whereas low market tightness indicates high liquidity and low transaction costs.[2] For example, during the dotcom bubble, information technology companies were very difficult and expensive to buy a part of, through stock, loan, or other methods, due to the tightness of competition in the market.[citation needed]
In equity markets, market tightness is measured using percentage relative spread.[3][2]
In housing markets, measures of market tightness include the probability of achieving a sale and house price appreciation. Tighter housing markets result in greater seller bargaining power and higher sale prices.[4]
Labour market tightness is measured as the ratio of job vacancies per unemployed person or jobseeker.[5]