market economy

Examples of market economy in the following topics:

• Differences Between Centrally Planned and Market Economies

  • The key difference between centrally planned and market economies is the degree of individual autonomy.
  • A pure market economy, or capitalist system, is one perfectly free from external control.
  • Although they avoid many of the inadequacies of planned economies, market economies are not free of their own problems and downfalls.
  • Despite these and other problems, market economies come with many advantages, chief among which is speed.
  • Because they do not need to wait for word from the government before changing their output, companies under market economies can quickly keep up with fluctuations in the economy, tending to be more efficient than regulated markets.

• Economic Systems

  • Markets and command exist in traditional economies.
  • Tradition and markets exist in command economies.
  • Western industrial societies categorized as "market-oriented" economies rely primarily on exchange, but contain elements of tradition and command.
  • In market economies tradition is important to such decisions regarding values, expectations about behavior (trust, loyalty, etc.), fashion, preferences about housing, choices about occupations and geographic preferences.
  • Command is also found in market economies as regulations and laws regarding the allocation or resources and goods.

• The Role of the Financial System

  • A financial market or system is a market in which people and entities can trade financial securities, commodities, and other fungible items.
  • There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded).
  • An economy that relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy, in contrast either to a command economy or to a non-market economy such as a gift economy.
  • Financial markets are associated with the accelerated growth of an economy.
  • Equity markets are the most closely followed of the financial markets.

• The Function and Nature of Markets

  • A market economy is an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
  • The major defining characteristic of a market economy is that decisions on investment and the allocation of producer goods are mainly made through markets.
  • This is the opposite of a planned economy, where investment and production decisions are embodied in a plan of production.
  • Free markets may have different structures: perfect competition, oligopolies, monopolistic competition, and monopolies are all types of markets that may exist in a capitalist economy.
  • The most basic models in economics assume that markets are free and experience perfect competition - there are many buyers and sellers so no individual actor may affect a good's price; there are no barriers to exit or entry; products are homogeneous; and all actors in the economy have perfect information.

• Mixed Economies

  • A Mixed Economy exhibits characteristics of both market and planned economies, with private and state sectors providing direction.
  • Social market economy is the economic policy of modern Germany that steers a middle path between the goals of socialism and capitalism within the framework of a private market economy and aims at maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, public welfare and public services by using state intervention.
  • A mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
  • Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects .
  • While there is not one single definition for a mixed economy, the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets.

• Mixed Economies

  • A mixed economy is a system that embraces elements of centrally planned and free market systems.
  • A mixed economy is a system that embraces elements of centrally planned and free market systems.
  • While there is no single definition of a mixed economy, it generally involves a degree of economic freedom mixed with government regulation of markets.
  • As a result, the market is generally the dominant form of economic coordination.
  • However, to mitigate the negative influence that a pure market economy has on fairness and distribution, the government strongly influences the economy through direct intervention in a mixed economy.

• Economies of Scale and Network Externalities

  • Economies of scale and network externalities discourage potential competitors from entering a market.
  • They discourage potential competitors from entering a market, and thus contribute to the monopolistic power of some firms.
  • A natural monopoly arises as a result of economies of scale.
  • This makes it difficult for new companies to enter the market and to gain market share.
  • Define Economies of Scale., Explain why economies of scale are desirable for monopolies

• The Global Economy

  • Now that the world has entered the twenty-first century, we are seeing the emergence of an interdependent global economy.
  • As a result of this rapid shift towards an integrated, global economy, brands must adjust all aspects of the marketing mix to fit local tastes and needs, while maintaining a consistent product and brand image.
  • Oxford University Press defines global marketing as "marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives. " The global economy certainly provides advantages to companies wanting to increase revenues and expand their brand.
  • The global economy provides many advantages for companies that are able to introduce their products on a global scale, while customizing their marketing strategies for different languages, cultures, and socio-economic demographics.
  • Some of the challenges to marketing in a global economy are:

• Informal economy

  • An informal economy is economic activity that is neither taxed nor monitored by a government and is contrasted with the formal economy as described above.
  • The informal economy is thus not included in a government's Gross National Product or GNP.
  • Although the informal economy is often associated with developing countries, all economic systems contain an informal economy in some proportion.
  • The terms "under the table" and "off the books" typically refer to this type of economy.
  • The term black market refers to a specific subset of the informal economy.

• Informal Economy

  • Formal economy goods may be taxed and are included in the calculation of a government's gross national product (GNP), which is the market value of all products and services produced by a country's companies in a given year.
  • All economies have informal elements.
  • Participation in the informal economy may result from lack of other options (e.g. people may buy goods on the black market because these goods are unavailable through conventional means).
  • Whereas de Soto's work is popular with policymakers and champions of free market policies, many scholars of the informal economy have criticized it both for methodological flaws and normative bias.
  • Analyze the impact of the informal economy on formal economy, such as the black market or working "under the table"