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A social and economic system in which prices are fixed by the law of supply and demand rather than by a government or other body. In its pure form, a market economy is an economy absent of government subsidies, incentives, or regulations. A market economy contrasts with both a planned economy and a mixed economy. No economy is a complete market economy: most countries claiming to have market economies in fact have a market economy combined with greater or lesser government regulation, sometimes called a social market. Proponents of a market economy argue that it is more efficient than any alternatives, promotes fair competition between its participants, and rewards skill and hard work. Critics allege that a market economy perpetuates class differences and rewards ruthlessness over actual labor. Milton Friedman, Friedrich Hayek, and Ludwig von Mises were three major 20th-century proponents of the market economy. See also: Capitalism, socialism, John Maynard Keynes.
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price systeman ECONOMY in which basic decisions about the allocation of resources, which goods and services are produced and in what quantities, are determined by the interaction of buyers and sellers in factor and product MARKETS. See EQUILIBRIUM MARKET PRICE, MARKET CONDUCT, MARKET PERFORMANCE, MARKET STRUCTURE, MARKET STRUCTURE-CONDUCT-PERFORMANCE SCHEMA.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
market systemsee PRICE SYSTEM.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005