Essay about Mixed Economy

1844 Words Mar 14th, 2013 8 Pages
Mixed Economy
A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics. This system overcomes the disadvantages of both the market and planned economic systems.
Features
* Resources are owned both by the government as well as private individuals. i.e. co-existence of both public sector and private sector. * Market forces prevail but are closely monitored by the government.
Advantages
* Producers and consumer have sovereignty to choose what to produce and what to consume but
…show more content…
However, this system is based entirely on trends which are subject to change quickly, especially in the case of non-essential goods, such as clothing and technology products. This could be the reason of periodic crises, until demand and supply restabilize the market. A mixed economy can prevent such events by allowing the government to intervene with state-directed investments and fluctuating tariffs for example.
Helping Producers and Consumers * In mixed economies, governments can set limits on the minimum price suppliers can sell their goods, as well as a cap on retail price. This way, both suppliers can be sure of the minimum amount they can gain through their work, while consumers are protected against skyrocketing prices in times of increased demand. For this reason, government agencies, such as the Federal Trading Commission in the U.S. and the Office of Fair Trading in the U.K., are responsible for the prevention of illegal iniquitous policies against supplies or consumers.
Harming Competition * A mixed economy allowing government intervention in the form of state monopolies harms competition, which can have serious effects in the economy's performance. Competition in a capitalist economy is the driving force behind better products and low prices, as suppliers try to lure consumers

Related Documents