Advantages of a Free Market

Free Market

Criticisms and applause go hand in hand for a free market. Certain people believe it is a kind of market which sells illegal goods and services whereas others believe it is a market which promotes entrepreneurship and creativity. Regardless of word of mouth, it is a common phenomenon that the free market has a set of benefits which encourages the betterment of the market. So let’s understand some of the advantages of the open market.

Absence of Regulations and Policies

Any single firm or organization do not control a free market, instead, it is controlled by the forces of demand and supply. This leaves the open market at an advantageous corner as it does not have to abide by the policies and need not spend on tax regulations as such. Instead, this money can be put in for the development of the business, thereby achieving more growth and stability in all its future endeavors.

Customer is King

Since the forces of demand and supply control the market, the customers tend to decide these forces. If a customer does not want a product of inadequate quality, he/she will not demand it, and eventually, the product will go out of service, because if there is no demand, then that reduces supply and that later on brings down production. Leaving the matter of choice in the hands of the customer is an ideal method as firms try to win their satisfaction. This satisfaction also includes a price which the consumer seems to be comfortable with, and hence at the end, the customer always benefits.

Innovation and Creativity

 
As individuals put together to run the market, they face a sense of competition. As these firms need not abide by rules to face this competition, they are left by themselves to be innovative and creative as it hinders their survival. If these individuals lack the required skills to stay put, then they eventually run out of business. Such drastic situations lead to the creation of untimely decisions which might or might not benefit the company. Hence this pushes them forward towards the path they must undertake.

Appropriate Allocation and Utilisation of Resources

Consumers ‘won’t pay for everything and anything. Hence this leads to the optimum utilization of resources as they are distributed in a better manner. Producers and manufacturers tend to maintain the output depending upon the needs of the consumers and not otherwise. As only a particular set of resources are required for manufacturing, this leads to the prevention of scarce resources. In a world where numerous resources are depleting from time to time, conservation and prevention is critical for their survival and growth.