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Free Market


One view is that a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority. Another view considers systems with significant market power, inequality of bargaining power, or information asymmetry to be less than free.

It is a result of a need being, then the need being met. Some believe a free market contrasts with a regulated market, in which government intervenes in supply and demand through various methods such as tariffs used to restrict trade and protect the economy. Prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy. Others believe regulation might be part of a free market, if the regulation is necessary to control significant market power, inequality of bargaining power, or information asymmetry. The latter view implies a free market is not necessarily deregulated, although some of those with the former belief speak of free markets and deregulated markets as similar.

Although free markets are commonly associated with capitalism within a market economy in contemporary usage and popular culture, free markets have also been advocated by free-market anarchists, market socialists, and some proponents of cooperatives and advocates of profit sharing.

The laissez-faire principle expresses a preference for an absence of non-market pressures on prices and wages, such as those from discriminatory government taxes, subsidies, tariffs, regulations of purely private behavior, or government-granted or coercive monopolies. Friedrich Hayek argued in The Pure Theory of Capital that the goal is the preservation of the unique information contained in the price itself.


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