Free Market Economy & Mixed Economy Essay Sample


Market economy has now become an accepted norm in the industrial world. Market economy is also known as the free market economy and depends upon the market forces named as supply and demand.

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Advantages of Market Economy

Market economy offers a perfect competition which helps the supplier and buyer to trade the homogenous goods. Firms are free to enter and exit from the market without any additional costs and government invention. This perfect competition helps to allocate the resources. Secondly in market economy agents are volunteer to make decisions on price mechanism and this mechanism is not manipulated by the agent, buyer and seller. Thirdly buyer and seller have perfect information about the prices and nature of things to be sold.

Drawbacks of Market Economies

Market economies provide a lot of positive things but there are many problems associated with market economies. First major disadvantage of market economies is that it does not provide basic needs to its people in the society. For example when a company leaves its business all of its local employees lose their jobs and too lose their income. In case of market failure the companies become more powerful and monopoly. If government does not take care of this failure the monopoly companies charge more prices to consumers.

Advantages of Mixed Economies

Mixed economies combine the best traits of the capital systems and command economies. People involved in the mixed economies have freedom to choose under the specified rules. Mixed economies provide the way to pay more attention to achieve the social benefits. In mixed economic system the poor pays much low taxes. Both public sector and private sector are involved to solve the problems.

Disadvantages of Mixed economies

Because decision making is centralized in mixed economies so the government officials do not react positively. The decision makers at center are not fully aware about the conditions and requirements of local people. People adjusted for the employment do not meet the required capacity in mixed economies. Consumers with low standard of living are not in position to purchase the expensive goods.


In this paper the advantages and disadvantages of the Market economy and Mixed economy are discussed. Both types of economies have edge over their disadvantages. Developing countries show their tilt towards the Market economy to stabilize their economic developments.


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