Mixed Market Economy

Mixed Market Economy is an economy that mixes parts of the command, or government directed economy, with the market economy, or an economy that is purely driven by actions of the markets.

A mixed economy sees the government being involved with economic decisions, but still allows many private companies to provide goods and services.


Role of Government

•The government plays an important, although limited, role in the economy of any mixed economy.
•Mixed economies see many decisions made by individual consumers and producers, with little input from the government.
•Laissez-Faire is the general practice of the government in a mixed economy.
•There are six roles that the government should be fulfilling in a mixed economy.


1) Maintaining Legal and Social Framework

•In a mixed economy, the government maintains legal and social framework:

- The government will set rules and laws for businesses to work within, but if the business chooses to go outside the lines, the government can impose fines and penalties to force compliance.

- Protecting private property rights (patents trademarks)

- Protecting the common good (pollution, safety)


2) Maintaining Competition

•In a mixed economy, the government maintains competition between firms:

- The government uses the rules from the previous to protect competition between firms, for instance, ensuring that one company cannot control all aspects of a market.

- Microsoft anti-trust suit
- Department of Justice review of mergers


3) Providing Good and Services

•In a mixed economy, the government provides goods and services that individual businesses cannot or will not provide

- The government provides us roads to travel on, schools to attend, and other public services that might not otherwise be provided for citizens.

- Airport and Seaports
- Public schools


4) Redistributing Income

•In a mixed economy, the government sees that income should be redistributed to other members of society:

- Through the use of taxes, the government redistributes income from the very wealthy to the poor. While not trying to completely redistribute income, basic services are usually provided with this money

- Food assistance programs
- Tax returns

5) Stabilizing the Economy

•In a mixed economy, the government wants to maintain a stable economy:

- The government has the goal of reducing large shifts in the economy, with the goal of eliminating things like unemployment and inflation. The government ultimately wants to increase total economic growth.

- Job training programs
- Federal Reserve Programs

6) Correcting for Externalities

•In a mixed economy, the government wants to correct externalities:

- The government has the goal of correcting issues that occur in the market, such as fixing costs and benefits of certain actions as well as fixing any market failures.

- General Motors and Chrysler bailouts
- American Recovery and Reinvestment Act of 2009








Última modificación: martes, 14 de agosto de 2018, 10:18