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, relations and values changed, which ultimately led to free competitive relations, which can be determined by the main features of the free market.
What is a free market?
To answer this question and to understand whether there is such a form of exchange of goods, 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 imply any extraneous 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.
The 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. Thus, there can be many entities 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 major feature of the free market is the mobility of production factors, i.e. when the seller can easily move to another industry, starting to engage in activities there.
Such signs are practically not feasible, since someone will always interfere in the relationship, the state will monitor the activities of the subjects, and of course, impose certain restrictions.
Other main signs of a free market
Several features were listed just above, but there are many more that reveal 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 influence from the state.
Having listed the main features of a free competitive market as a model, it should be understood that it, like everything else, 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 allocated efficiently, which determines the quality of products. It should also be noted that in the free market, new products are constantly appearing, everything is being improved, technologies are developing rapidly. Even though things are changing, companies are becoming more flexible and adapt to changes. And consumers, in turn, calmly choose the product that will satisfy their need completely.
But then 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, for example, state defense goods. The main thing for each subject will be to obtain their own benefits. A free market will never be stable, which means it is subject to economic downturns and recessions.