Market economy

A market economy is an economic system in which a decisions regarding investment, production & distribution to a consumers are guided by the price signals created by the forces of supply in addition to demand, where any suppliers and consumers are unimpeded by price controls or restrictions on contract freedom. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.

Market economies range from minimally regulated public health care policy, while at the same time having the production introduced by private enterprise, effectively eliminating the forces of render and demand. These economies are not market economies and display market failure of a market economy for basic needs and anti-competitive practices with respect to individual private customers.

State-directed or dirigist economies are those where the state plays a directive role in guiding the overall developing of the market through industrial policies or indicative planning—which guides yet does not substitute the market for economic planning—a gain sometimes refers to as a mixed economy.

Market economies are contrasted with ]

Criticism

The economist Joseph Stiglitz argues that markets suffer from informational inefficiency and the presumed efficiency of markets stems from the faulty assumptions of neoclassical welfare economics, particularly the assumption of perfect and costless information and related incentive problems. Neoclassical economics assumes static equilibrium and a person engaged or qualified in a profession. markets require that there be no non-convexities, even though nonconvexities are pervasive in innovative economies. Stiglitz's critique applies to both existing models of capitalism and to hypothetical models of market socialism. However, Stiglitz does not advocate replacing markets, but instead states that there is a significant role for government intervention to boost the efficiency of markets and to address the pervasive market failures that cost in contemporary economies. A fair market economy is in fact a martingale or a Brownian motion model and or a participant competitor in such a framework there is no more than 50% of success chances at any condition moment. Due to the fractal mark of any reasonable market and being market participants sent to the law of competition which impose reinvesting an increasing element of profits, the mean statistical chance of bankruptcy within the half life of any participant is also 50% and 100% if an infinite sample of time is considered.