The role of government in markets

 

The role of government in markets;

The free market is a system in which the prices of goods and commodities are self-regulated by the open market as well as by consumers. In a free market, the laws and forces of supply and demand contain no interference by a government or other authority and are devoid of all forms of economic immunity, monopolies, and artificial scarcity.

Proponents of the free market concept contrast with the organized market in which the government interferes with supply and demand through various methods, such as tariffs used to restrict trade and protect the local economy. In an ideal free-market economy, the forces of supply and demand determine the prices of goods and services freely, and they are allowed to reach their equilibrium point without government policy interference.

There are some criticisms of the theoretical concept of systems with large market power, or disparities in the ability to supply and demand, as regulation in these cases is necessary to control many imbalances and allow markets to operate more efficiently as well as achieve more positive social outcomes.