Types of economic system - Characteristics and similarities:
1. Free Market System
A free market is a market without economic intervention and regulation by government except to enforce ownership and contracts. It is the opposite of a controlled market, where the government regulates how the means of production, goods, and services are used, priced, or distributed. This is the contemporary use of the term "free market" by economists and in popular culture; the term has had other uses historically.
-A free-market economy is an economy where all markets within it are free.
-This requires protection of property rights, but no coercive regulation, no coercive subsidization, no coercive government-imposed monopolistic monetary system, and no coercive governmental monopolies.
2. Planned Economy
Planned economy (or command economy) is an economic system in which the state or workers' councils manage the economy. It is an economic system in which the central government makes all decisions on the production and consumption of goods and services.
Its most extensive form is referred to as a command economy, centrally planned economy, or command and control economy. In such economies, central economic planning by the state or government controls all major sectors of the economy and formulates all decisions about the use of resources and the distribution of output.
Planners decide what should be produced and direct lower-level enterprises to produce those goods in accordance with national and social objectives.
Planned economies are in contrast to unplanned economies, such as a market economy, where production, distribution, pricing, and investment decisions are made by the private owners of the factors of production based upon their individual interests rather than upon a macroeconomic plan.
3. Mixed Economy
A mixed economy is an economic system that includes a variety of private and government control, or a mixture of capitalism and socialism.
Fig: Mixed Economy Circular Flow Model
There is not one single definition for a mixed economy, but relevant aspects include: A degree of private economic freedom (including privately owned industry) intermingled with centralized economic planning and government regulation (which may include regulation of the market for environmental concerns, social welfare or efficiency, or state ownership and management of some of the means of production for nation or social objectives).
Elements of a mixed economy