A free market has two main advantages; one is that it gives freedom to create, innovate and take the risk with new products. It gives economic freedom and transparency. Second, competition drives the market participants and customers to determine the market price. On the other hand, government intervention is necessary for the market with the inefficient allocation of resources. It is required to reduce the harm caused by natural economic events, maximizing social welfare involving public goods and without regulation, businesses produce negative externalities. Government tries to reallocate resources to promote social equality and welfare to the needy.
Get Answers For Free
Most questions answered within 1 hours.