Market town or market right is a legal term, originating in the medieval period, for a European settlement that has the right to host markets, distinguishing it from a village and city. A town may be correctly described as a "market town" or as having "market rights", even if it no longer holds a market, provided the legal right to do so still exists.

England

In pre-19th century England, the majority of the population made their living through agriculture and livestock farming. Most lived where they worked, with relatively few in towns. Therefore, farmers and their wives brought their produce to informal markets held on the grounds of their church after worship. Market towns grew up at centers of local activity and were an important feature of rural life, as some place names remind us: Market Drayton, Market Harborough, Chipping Norton and Chipping Sodbury — chipping was derived from a Saxon verb meaning "to buy".

Market towns often grew up close to fortified places such as castles, to enjoy their protection. Framlingham in Suffolk is a notable example. Markets were located where transport was easiest, such as at a crossroads or close to a river ford. When local railway lines were first built, market towns were given priority to ease the transport of goods. In Calderdale, West Yorkshire, several market towns close together were designated to take advantage of the new trains. The designation of Halifax, Sowerby Bridge, Hebden Bridge and Todmorden illustrate such an example.

The English monarchy created a system by which a new market town could not be established within a certain traveling distance of an existing one. This limit was usually a day's worth of traveling to and from the market, and buying or selling goods. If the travel time exceeded this standard, a new market town could be established in that locale. As a result of the limit, market towns often petitioned the Monarch to close down illegal markets in other towns. These distances are still law in England today. Other markets can be held provided that they are licensed by the holder of the Royal Charter, which tends currently to be the local Town Council. Failing that, the Crown can grant a license.

As traditional market towns developed, they had a wide main street or central market square. These provided room for people to set up stalls and booths on market days. Often the town erected a market cross in the centre of the town, to obtain God's blessing on the trade. The cross was also a reminder "not to defraud by cheapening". Some take this warning to suggest that market traders were dishonest. Instead, it was a warning to townsfolk not to barter the traders so low as to discourage their returning.

Notable examples of market crosses in England are at Chichester and Malmesbury. In Scotland, the crosses are called "mercat crosses". Market towns often featured a market hall, with administrative quarters at the first-floor level, above the covered market. Market towns with smaller status include Minchinhampton, Nailsworth and Painswick near Stroud, Gloucestershire.
Colchester claims to be England's oldest recorded market town.

A "market town" may or may not have rights concerning self-government that are usually the legal basis for defining a "town". Newport, Shropshire is in the borough of Telford and Wrekin, but is separate from Telford. In England, towns with such rights are usually distinguished with the additional status of Borough. It is generally accepted that, in these such cases, when a Town was granted a Market, it gained the additional autonomy conferred to separate towns.

The National Federation of Market Traders (NFMT), situated in Barnsley, South Yorkshire, has 36,000 members and close links with market traders' federations throughout Europe. All market customers have the same rights as they would when shopping with any other retailer and, therefore, can buy with confidence.

German-language area

The medieval right to hold markets () is reflected in the prefix Markt of the names of many towns in Germany and Austria, for example, Markt Berolzheim or Marktbergel. Other terms used for market towns were Flecken in northern Germany, or Wigbold and Freiheit in Westphalia.

Market rights were designated as long ago as in the Carolingian Empire: in 800 Charlemagne granted the title of a market town to Esslingen am Neckar. The conferment was one of the regalia in the Holy Roman Empire, as mentioned in the Constitutio by Frederick I Barbarossa at the 1158 Diet of Roncaglia. With the rise of the territories, the ability to designate market towns was passed to the princes and dukes, as the basis of German town law.

The local ordinance status of a market town (Marktgemeinde or Markt) is perpetuated through the law of the German state of Bavaria, Austria and the Italian Province of Bolzano-Bozen. Nevertheless the title has no further legal significance, as it does not grant any privileges.

Norway

In Norway the medieval market town (Norwegian kjøpstad from the old Norse kaupstaðr) was a town which had been granted commerce privileges by the king or other authorities. The citizens in the town had a monopoly over the purchase and sale of wares and operation of other businesses, both in the town and in the surrounding district.

Market towns were first created in Norway in the 12th century to encourage businesses to be concentrated around specific towns. Import and export was to be conducted only through market towns to allow oversight on commerce and to simplify imposition of excise taxes and customs duties. It served to encourage growth in areas which had strategic significance, providing a local economic base for construction of fortifications and population for defense of the area. It also served to restrict Hanseatic League merchants from trading in areas other than those designated.

Norway included a subordinate category to the market town, the "small seaport" (Norwegian lossested or ladested), which was a port or harbor with a monopoly to import and export goods and materials in both the port and for a surrounding outlying district. Typically these were locations for exporting timber and importing grain and goods. Local farm goods and timber sales were all required to pass through merchants at either a small seaport or a market town prior to export. This encouraged local merchants to ensure trading went through them, which was so effective in limiting unsupervised sales (smuggling) that customs revenues increased from under 30% of the total tax revenues in 1600 to more than 50% of the total taxes by 1700.

Norwegian “market towns” died out and were replaced by free markets in the 1800s. After 1952 both the “small seaport” and the “market town” have simple town status.