The main economic systems are market, planned, mixed, and traditional. A market economy is based on supply and demand, while a planned economy is controlled by the government. A mixed economy combines elements of both. Traditional economies are primitive and producers are also consumers. Other types of economies include participatory, information, and virtual systems.
The main types of economic systems are the market economy, the planned economy, the mixed economy and the traditional economy. There are also secondary economic systems that play a role in some situations. However, while an economic system may claim to be part of a new pattern of thinking, it follows more closely one of the primary systems mentioned.
A market economic system is one that does not have centralized planning by the government. Products are bought and sold by people who have a direct interest in the transaction, both as a supplier and as a consumer. Price is determined by supply and demand for a given product and will normally not go beyond some accepted parameters. When it does, it usually comes back into balance. The market economy is often referred to as capitalism.
The opposite of a market economic system is a planned economic system. In this type of economy, the government or some other centralized body, usually closely related to the government, makes decisions to some extent about production and consumption. Those who run a planned economy can also set prices and manage the economy until goods and services can be produced or offered for sale. Communism and socialism are common types of planned economies.
A mixed economic system encompasses traits of many different economies, most commonly market and planned economies, to find a solution that works for all. In most cases, countries use a mixed economic model. While some may tend to be more market-based and others more planned, some feel that some regulation is needed, but also some freedom for suppliers and consumers to have some flexibility.
The other type of economic system that can be employed in some places in the world is known as the traditional economy. In this economy, producers are usually also consumers. Those producers usually make enough for themselves and families. In case of surplus, goods and services can be exchanged for others. This is a very primitive type of economy and not in use in any industrialized nation, at least not on a large scale.
Other types of economic systems include the participatory system, the information system and even the virtual system. While it may be difficult to build an entire country or system of buying and selling goods on top of these kinds of economies, they can still play an important role. In fact, these types of systems are responsible for producing billions of dollars of economic activity each year.
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