The market economy is of this typeeconomic relations, in which fundamental economic decisions are made by decentralized methods. Such an economy functions through the market as a form of mutual relations of individual economic entities, independently and without the help of other decision-makers.
In theory there is a concept of a perfect market,what is considered the market, which sets one cost per product at a certain time. This requires compliance with several conditions: regular and high demand, a large number of participants in business activities, mobility of the main factors of production, free access of participants to information and free competition among sellers and buyers.
Market economy, as a rule, does not possessall named features at the same time. Therefore, in reality there is not a perfect market (a pure market economy), but 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 requires the creation of a developed infrastructure, which includes such components as the market of factors of production, the market of products and services, the money market.
Market economy is characterized byinteraction and mutual influence of these three markets. When they reach equilibrium, there comes a general macroeconomic balance. This is possible if, as a result of the interaction of supply and demand in the market of goods and services, the equilibrium level of production and prices is reached, in the capital market-the corresponding level of loan interest, in the market of production factors-a stable equilibrium of costs and factors of production.
From the implementation of all these conditions and dependsmarket economy essence and functions. The market performs several important functions in the economy. It is regulating (regulates production, influencing the level of demand and supply), stimulating (stimulating the introduction of scientific achievements, reducing costs, improving the quality of work), informational (provides objective information about the range, quantity, quality of goods, services), intermediary (the consumer can choose suppliers of goods), sanitizing (clears from economically unviable economic units) and social (differentiates the incomes of its participants).
The market unites all the participants in a single systemeconomic relations - both producers and consumers. The subjects of the market in their behavior are motivated, as a rule, only by private enthusiasm. That is, in fact, they are not interested in the fact that the economy has worked well as a whole. Therefore, the coordination of separately taken decisions on the market is carried out by a market mechanism that links the decisions of individual economic entities together through competition and the price system.
The market economy is one of the most significantcharacteristics has competition. It is competition that can restrain individual private interests, directing them to create products that are truly socially necessary. It promotes a more complete and efficient use of limited resources, which are channeled only to cost-effective production. Competition is the basis of control and regulation in the operation of the market mechanism.
In order for the market to function stably and without failures,It is necessary that the main chain of economic processes (production, further distribution, exchange of products, final consumption) should be developed schemes of people's behavior in the economy, which are called economic systems. Today, four main types of economic systems are distinguished: the market of free competition, the traditional economic system, the modern market economy and the economy of the administrative command system.
