Pros and cons of market economy today

essence of a market economy

the pros and cons of a market economy market economy - a set of economic relations where the defining institution and regulator of economic processes is the market.In such a system, market-based mechanisms that respond to supply and demand determine the volume of production, distribution structure and rate of consumption of goods and services.On the one hand, it is clear and simple.However, as we know, any concepts and processes have their pros and cons.So here.It is worth a closer look at the features, advantages and disadvantages of the market economy.

Private property

market implies an absolute advantage and private property to the state.And if we consider the pros and cons of a market economy, it should be considered a positive aspect of it, as an entrepreneur, possessing this property will be possible to use it effectively in order to maximize profit margins.There is no "common" property, which, as history shows, is often used inefficiently.

price for products

advantages of a market economy existence of equilibri

um prices should also be attributed to the advantages of the market economy.Price is determined by supply and demand.That is, the price is equal to the amount you're willing to spend on goods for which buyers and sellers are willing to sell it.Supply and demand determine how goods are produced, which and how many resources to use.In other words, running so-called "invisible hand of the market", which in his works described the British scientist Adam Smith.Considering the pros and cons of a market economy, it must be said that on the other hand, there are concepts such as mergers and acquisitions, which suggest the emergence of monopolies and oligopolies.A monopolist sets the monopoly price.This price may be unreasonably high for buyers.At the same command economy, many prices are set centrally, especially social goods for certain sectors of the population.

Competition and economic freedom

Advantages and disadvantages of the market economy Talking about the pros and cons of a market economy, it is necessary to know that in such an economy, there is a high level of economic freedom.That's good, because the manufacturer decides what goods, how much, from what and for whom to produce, so that these activities brought him the maximum profit.Competition among manufacturers and retailers, in turn, causes them to make their product more attractive to customers and provides the right to choose.At the same time, the market economy is often characterized by the absence of legislation regulating certain aspects of it, which contributes to the emergence of low-quality goods sold under the guise of quality, as well as the appearance of certain types of fraud.

Conclusions

should be noted that the planned and command economies also have their pros and cons.Market economy in its pure form does not exist anywhere else.So, today, every state, leading its economy at the macro level, trying as efficiently as possible to take into account all the positive and negative aspects of industrial and commercial processes in order to improve their economic situation and accelerate economic growth.