To what extent do you agree with free market economies being more effective than a mixed economy - Essay Example

This is because governments will always want to intervene in a market, by imposing taxes for purposes of raising revenue and protecting their markets (Clarke, 2009). There is also another form of a market system referred to as the mixed market economy. A mixed economy has some elements whereby the forces of demand and supply play a role in regulating the prices of commodities, at the same time; the government has some interference with the affairs of the market (Clarke, 2009). This is through taxes and subsidies.

In as much as the mixed economy was developed to solve the problems of a free market economy, it is important to denote that a free market economy is still a good form of market structure as compared to a mixed economy. The reason as to why a free market economy is better than a mixed economy is based on the fact that the market is very competitive. Companies, in their bid to attract customers and make sales, will resort to the production of high quality products and services. These companies are concerned with satisfaction of the various needs of their customers, and on this basis, the opinions of customers will be used to produce services and products for purposes of satisfying the needs of customers (Romero, 2003).

On the other hand, companies operating in a mixed economy cannot effectively achieve efficiency in providing services and products without increasing their costs. This is because their prices and financial activities are regulated by the various taxes that governments charge. The costs of improving these services will in turn pass over to the customers of the organization. On the other hand, companies in a free market economy would not need to increase their prices, for purposes of adding value to their products.

This is because they know that other companies will take advantage of these increases in price, and take over some of their customers (Romero, 2003). It is also cheaper to