Planned Economy and its advantages/disadvantages

Planned economy

• State ownership and control
• Consumer preferences is unimportant
• State decides what to produce
• E.g. Cuba, North Korea
• State ownership, control over economic resources

Advantages:

• Central planning prevents duplication and competition
• Production based on needs not consumer spending patterns
• Long term planning

Disadvantages

• No consumer choice
• No competition to improve product design and keep prices low.
• No motivation
• Slow decision making