Mixed/Market Economic System
By Devin Jackson
In a Market Economy, individuals purchases are motivated by their own interests. One of the main factors in Market Economies is the establishment of voluntary exchange, which is when people engage in a trade in which they believe that the benefits outweigh the costs.
Capitalism is the foundation of market economies. It operates on the belief that on their own, producers will create the goods and services that the public demands. This is followed by a laissez faire mentality, which means that they want the government to stay out of the economy for the most part. Competition also characterizes Market economies. It is the effort of two or more people, acting independently to get the business of others by offering the best prices. Another factor of market economies is consumer sovereignty. This is the idea that consumers can purchase whatever they want and can also choose to not purchase certain items. This shows that the consumers have the ultimate control over prices in the market.
There are very few 'pure' economic systems that exist today. Most are mixes of the various aspects from the different economic systems. This is called a Mixed Economy. An example of this is that in America, while we have a mostly market economy, we have government influence over certain areas such as regulation. This assures quality and helps to diffuse the amount of monopolies.
Most mixed economies favor either market or command ideals in their economies implementation. For example, while America is a mixed economy, it is widely considered a market economy due to it's emphasis on a free market. Many countries throughout the world are moving away from command economies and toward market economies. They do this by privatizing businesses, which means to change a business from government ownership to private ownership. Another example is Sweden. It is a mixed economy, but has a lot of government influence. This leads to trade offs, such as security, at the expense of higher taxes.