Once upon a time, people exchanged goods for other goods, and so trade was carried out. A little later, monetary units appeared, and goods acquired value. The market developed, attitudes and values changed, which eventually led to free competitive relations, which can be identified by the main features of a free market.
What is the free market?
To answer this question and understand whether such a form of exchange of goods exists, it is necessary to determine the signs. But many scientists and economists argue that this is an ideal that you can always strive for, but never achieve.
The main features of the free market and the concept itself is expressed in the fact that this model does not involve any outside interference, including state regulation. In this case, the state should only protect the rights of subjects and nothing more, and prices should be set depending on supply and demand.
Main signs of a free market
After the definition of this concept was given, it became clear that, based on it, every seller and buyer can enter the market. ThusThere can be many subjects on the market, i.e. there will not be only one seller who will offer a unique product, or there will not be one buyer who can buy a product for a certain price.
Another main feature of a free market is the mobility of factors of production, i.e. when the seller can easily move to another industry by starting to do business there.
Such signs are actually not feasible, since there will always be someone to interfere in relations, the state will monitor the activities of the subjects, and of course, impose certain restrictions.
Other main signs of a free market
A few signs were listed above, but there are many more, which reveals the essence of this concept:
- Private property plays an important role.
- It is possible to choose a seller and a buyer.
- There is free competition.
- Little government influence.
Having listed the main features of a free competitive market as a model, it should be understood that, like everything else, it has two sides of the coin, which are expressed in advantages and disadvantages.
The main advantage is the impossibility of a shortage of goods, because resources are distributed efficiently, which determines the quality of products. It should also be noted that in a free market, new items constantly appear, everything is improved,technology is developing rapidly. Even though things are changing, companies are becoming more flexible and adapting to change. And consumers, in turn, calmly choose the product that will satisfy their need completely.
But what are the disadvantages of such an ideal model?
The free market cannot guarantee the employment of all citizens, who, moreover, will not be interested in participating in activities that will benefit only the state, such as national defense goods. The main thing for each subject will be to obtain their own benefit. The free market will never be stable, which means it is subject to economic downturns and recessions.
