Discussion:
Free Markets? Is the U.S. economy, or any economy, a "free market" economy?
Competition is a driving force in our economy. As firms compete with each other for consumer dollars, society benefits from the variety of products and services businesses provide while they are produced at otherwise lower costs and offered at affordable prices. At the same time, consumers drive demand which puts upward pressure on prices as consumers compete with each other for scarce goods and services. Firms increase their quantities supplied to meet growing demand while new firms may enter markets as long as conditions are conducive for profit generation. In all this, society benefits through markets allocating resources efficiently in answering the fundamental questions. But all of this is an idealized picture where it is assumed all actors have perfect information and all information is available freely. Describe in 200 to 300 words what can go wrong if we leave markets and businesses to do what they do without any governmental interference in light of the fact that information is incomplete, uncertainty exists, and information is asymmetric or unevenly distributed between businesses, investors, consumers and governmental entities. In this "real life" scenario, what are the consequences of no governmental interference in business in light of the fact businesses, investors, consumers and governmental entities are never fully informed and information is not freely obtainable?