Free market

In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities.[1] Proponents of the concept of free market contrast it with a regulated market in which a government intervenes in the exchange of property for any reason other than reducing market coercions.

Scholars contrast the concept of a free market with the concept of a coordinated market in fields of study such as political economy, new institutional economics, economic sociology and political science. All of these fields emphasize the importance in currently existing market systems of rule-making institutions external to the simple forces of supply and demand which create space for those forces to operate to control productive output and distribution. Although free markets are commonly associated with capitalism in contemporary usage and popular culture, free markets have also been components in some forms of market socialism.[2]

Criticism of the theoretical concept may regard realities of the difficulty of regulating systems to prevent significant market dominance, inequality of bargaining power, or information asymmetry, in order to allow markets to function more freely.

Historically, free market has also been used synonymously with other economic policies. For instance proponents of laissez-faire capitalism, may refer to it as free market capitalism because they claim it to achieve the most economic freedom.[1]


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