Concept

Free market

Overview

In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority. Proponents of the free market as a normative ideal contrast it with a regulated market, in which a government intervenes in supply and demand by means of various methods such as taxes or regulations. In an idealized free market economy, prices for goods and services are set solely by the bids and offers of the participants.

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.

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 achieves the most economic freedom. In practice, governments usually intervene to reduce externalities such as greenhouse gas emissions; although they may use markets to do so, such as carbon emission trading.

Overview adapted from Wikipedia (CC BY-SA 4.0; see the article history for authors).

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These are almost always able to undersell the smaller tradesmen, partly, it is understood, by means of division of labor, and the economy occasioned by limiting the employment of skilled agency to cases where skill is required; and partly, no doubt, by the saving of labor arising from the great scale of the transactions; as it costs no more time, and not much more exertion of mind, to make a large purchase, for…
John Stuart Mill, Principles of Political Economy
States what Free market is; the author is tied to Free market in the knowledge graph.
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The actual price at which any commodity is commonly sold, is called its market price. It may either be above, or below, or exactly the same with its natural price. The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity,…
Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations
States what Free market is; the author is tied to Free market in the knowledge graph.
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No more shall all the rest prosper who change the open free market into a carrion-pit of extortion and a den of robbery, where the poor are daily overcharged, new burdens and high prices are imposed, and every one uses the market according to his caprice, and is even defiant and brags as though it were his fair privilege and right to sell his goods for as high a price as he please, and no one had a right to say a…
Martin Luther, Martin Luther's Large Catechism
Opens on Free market; names Free market.
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Free market

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