The market includes both private and public (gov't) entities. Microsoft buys pens and paper, so does the Department of Justice. Both types of entities are in the market for office supplies.
The question here is to what extent the gov't interferes in the natural operations of the free market.
For example, if there is a scarce resource, like oil, the gov't may use its power to reserve a particular amount of oil for its own use. This makes the remaining oil even more scarce for private users who obtain it in the free market.