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But the whole concept defies logic.What other asset do you sell but hope to buy it back later at a lower price?

Futures markets work in exactly this way, and even worse, for every long there is a short because they are opposite sides of the same contract. And hedgers and producers enter into futures contracts exactly because they are speculating about future market prices and the consequences. A baker buying wheat thinks the price might go up, or is betting it won't go down. Otherwise he would simply purchase in the cash market. A producer is betting the price will go down, or at least won't go up.

Short sales are often a way of hedging down-side market risk for transactions. They serve multiple valid purposes.

I am involved in the negotiation of the acquisition of company a by company b. I acquire shares of company b, whose price will be higher when the merger occurs. But I don't want the risk that the overall market will drop, so I short shares in company a, thus betting only on the likelihood of the merger occurring and not the overall direction of the market.

I have an overseas tour company that does $50,000,000 in business in Europe, tours price in dollars, but the transactions are actually in Euros. I don't want to take the risk of adverse currency moves, since my business is otherwise profitable so I purchase currency futures. Somebody in Europe doing the opposite sells the same future I just bought (or some middle man buys and sells these futures, making a small commission while keeping his risk low by holding a portfolio of these things).

Short sales, sales at today's price, for a future delivery are a legitimate part of free market transactions.

Futures markets work in exactly this way, and even worse, for every long there is a short because they are opposite sides of the same contract

If you mean...that for every long that is actually "wanting" delivery...there is a physical seller..Then yes, you are correct.

But if you mean for every long contract..in let's say "CBOT Wheat"...there's a short contract. You would be wrong.

I am involved in the negotiation of the acquisition of company a by company b. I acquire shares of company b, whose price will be higher when the merger occurs.

First, it sounds like you're engaging in insider trading. Second, the acquiring company typically drops in price.

But I don't want the risk that the overall market will drop, so I short shares in company a, thus betting only on the likelihood of the merger occurring and not the overall direction of the market.

The price of shares in company a will rise when the merger occurs. Congratulations, you've managed to lose money on both sides of your "hedge".

Futures are a whole different thing and you know it. Don’t compare stocks with futures. The purpose of futures is too lock in a specific return for a product you are offering.

Currency transactions are the same way and you do those through options trading.. OPTIONS TRADING IS NOT STOCK TRADING.

Now you could actually buy the currency to hedge but most companies do not do that.. they engage in a contract so they limit their working capital output towards the hedge.