Market economy

market economy is a type of economic relations, in which the fundamental economic decisions are decentralized methods.Functions such an economy through the market as a form of relations between individual business entities, independently and without the help of other decision-makers.

uschestvuet In theory, the concept of the perfect market, what is considered to be a market in which the price is set one on one product at a certain time.This requires compliance with several conditions: regular and high demand, a large number of participants of business activity, the mobility of the main factors of production, the participants free access to information and free competition among buyers and sellers.

market economy, as a rule, does not have all the features named at a time.Therefore, it does not operate in reality perfect market (pure market economy), and a competitive market.For its normal operation requires the implementation of different forms of ownership (cooperative, joint stock, public, private, etc.).In addition, the development of market relations should be the creation of infrastructure, which includes components such as the market factors of production, market products and services, the money market.

market economy characterized by the interaction and interference of these three markets.When they reach equilibrium, comes the general macroeconomic equilibrium.This is possible if the interaction of supply and demand in the market of goods and services reached the equilibrium level of production and prices in the capital market - the respective level of interest on loans, on the market of production factors - stable balance of costs and production factors.

By implementing all of these conditions and the market economy depends on the nature and function.The market has several important functions in the economy.This regulating (regulates the production, affecting the level of supply and demand), challenging (stimulate the application of scientific advances, reduce costs, improve the quality of work), information (providing objective information about the variety, quantity, quality of goods, services), mediation (the user can choosesuppliers of goods), sanitize (clears the economically non-viable economic units) and social (income differentiates its members).

Market combines into a single system all the participants of economic relations - both producers and consumers.Market entities in their behavior motivated, as a rule, only a particular enthusiasm.That is, in fact, they are not interested in the fact that the economy has worked successfully as a whole.Therefore, the coordination of certain decisions made in the market provides a market mechanism that links decisions of individual economic entities together through the competition and the price system.

market economy is one of the most important characteristics of a competition.That competition is able to restrain the individual private interests, directing them to create products that are truly socially necessary.It contributes to a more complete and efficient use of the limited resources that are directed only at cost-effective production.Competition is the basis of the control and regulation of the market mechanism.

market to function stably and smoothly, it is necessary that the main chain of the economic process (production, further distribution, exchange of products, final consumption) have been developed patterns of behavior of people in the economy, which are called economic systems.Today, there are four main types of economic systems: free market competition, the traditional economic system, modern market economy and the economy of the administrative-command system.