Mixed Economy and its advantages/disadvantages

Mixed economy

• Some private businesses, driven by profit. Some controlled by government
• Private: mobiles, cars, computers
• Essential services: police, fire service, defence, social services. Goods and services which can benefit both consumer and society(merit goods)
• Taxes to the government
• Government places limits on the nature of business activity: restricting monopoly, control pollution from factories.

Advantages

• State provides the essential services
• Private sector encouraged for profits
• Competition keeps prices low
• Consumer choice
• Inefficient business behavior controlled

Disadvantages

• Heavy taxes reduce incentives to work hard or make profits
• Less efficient than private sector
• Excessive control over business activity can add costs and discourage enterprise