What Are the Advantages of a Market Economy?

Whitney Leigh White

Countries all across the globe follow different types of economical structures, which generally fall into one of the following categories: market, mixed, or command. Many people use the phrases "market economy" and "mixed economy" interchangeably with one another because the characteristics of both types are quite similar. When economies are compared to one another, distinct advantages of a market economy are easily seen. Two of these include the selling price of its distributed and traded goods, and its support from citizens to conserve scarce resources. For those people who prefer living in an economy in which the government plays a limited role, the advantages of a market economy are sure to satisfy.

In a market-based economy, the government doesn't tell companies and citizens which types of products to provide and how much to charge for them.
In a market-based economy, the government doesn't tell companies and citizens which types of products to provide and how much to charge for them.

At the turn of the 21st century, most countries wanted the advantages of a market economy and were operated under some degree of governmental regulation. These regulations were put into place to help maintain a healthy balance of competition between businesses, thus, being one of the main reasons that this kind of economy has flourished and become so well-known. Some people refer to this economy as one where citizens are “voting with their dollars” because it is the goods they are willing to pay for that determines what manufacturers and businesses will make available.

Even though economies fluctuate on a regular basis, the advantages of a market economy help it to adapt, which enables the production of favorable pricing on goods and trades. Adaptation is easy to acquire by their businesses because they are not regulated by large amounts of government protocols when organizational change take place. Businesses are also able to keep up with the demand levels of consumers because there is a large accessibility to a variety of available goods. On a continuous basis, market economies are able to provide consumers with whichever goods and services they most demand.

Many times, an economy will collapse if its consumers do not favor its structure, but this generally does not occur in a market economy. The support of its consumers tends to be present on a high level because they can buy what they want, when they want, and in whatever amount they want. In addition, consumers who are business owners are able to produce in the same fashion that consumers can buy. Consumers and business owners alike in a market economy usually feel that they are responsible for their financial status, which also increases their support levels. This type of market is also advantageous because it operates in a manner so that it can use its plentiful resources before using scarce ones.

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Discussion Comments


I think the best part about the market economy is that it encourages trade. This makes it possible for me to buy something that was made in India or Argentina and I love that. Market economies encourage globalization.


@SarahGen-- I don't agree with you because in a market economy, prices reflect what consumers want. Because if consumers want something, manufacturers will produce it because they want to make money. And the higher the supply, the lower the price.

If organic food costs more than what you're willing to pay, this means that most Americans do not want organic food. If they did and if those who could afford it all bought organic, believe me, more would be produced and prices would fall.

I completely agree that we "vote with out dollars" in a market economy. This is why, ultimately, a market economy will reflect what that society wants and needs.


I'm not sure if a market economy is very advantageous. It's true that there are many options in terms of the kinds of goods that are available to me. But I wouldn't say that I can buy whatever I want and when I want because the prices largely determine that.

For example, I would love to eat organic food and it is available to me. But it costs considerably more than non-organic food and I can't afford it.

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