10-17-2005, 10:28 AM
Free markets are run by allowing the people and the businesses control how the economy is run. This assumes that the controlling businesses are in competition and there is not a monopoly.
An example of free markets:
nVidia and ATi are at the powers of the free market. They try to make the best product for the cheapest price. In order for both ATi and nVidia to stay in the market and not sell video cards for pennies on the dollar, they must come up with innovations.
New Technology is driven by innovation. Because video cards keep changing by adding and modifying for speed, we will continuously see better and better products. But only if the supply of video cards meet the demands of the people.
Gamers like us keep buying these cards and so, in the Free market approach Supply (Cards) = Demand (People who want cards). When Supply equals demand, a free market works to efficiency.
An example of Market Failures:
Market failures occur when one company or a monopoly dominates the market place. In theory, Monopolies are ineffiecient because the business can charge what they want.
Microsoft is an example of a possible market failure. The U.S. Federal Gov't states that Microsoft is a monopoly who is unfairly wiping out the competition. When Windows 98 came out, they integrated Internet Explorer with it. Netscape and other browsers called this unfair and wanted Internet Explorer a separate package from windows.
Because Microsoft decided to tie in a product and since it couldn't be removed from windows due to it's integration, the US considers this case unfair for other browser makers. Microsoft makes a settlement which involves:
1. Microsoft must allow other people to remove "middleware" like Internet Explorer.
2. Microsoft must share code that allows others to make software for thier OS and other software.
3. Three compliance committee directors must overwatch Microsoft to make sure the settlement is held.
But I am not going to tell you what to think. I say free markets is that they do work, just not always the way people want them to. Others argue that the market needs a "kick in right direction" and the Federal Gov't decides to make rules and regulations to protect the USA's interests. It's a matter of political opinion.
I could really go on and on with different examples. But the wikipedia has already done that for me.
http://en.wikipedia.org/wiki/Free_market
An example of free markets:
nVidia and ATi are at the powers of the free market. They try to make the best product for the cheapest price. In order for both ATi and nVidia to stay in the market and not sell video cards for pennies on the dollar, they must come up with innovations.
New Technology is driven by innovation. Because video cards keep changing by adding and modifying for speed, we will continuously see better and better products. But only if the supply of video cards meet the demands of the people.
Gamers like us keep buying these cards and so, in the Free market approach Supply (Cards) = Demand (People who want cards). When Supply equals demand, a free market works to efficiency.
An example of Market Failures:
Market failures occur when one company or a monopoly dominates the market place. In theory, Monopolies are ineffiecient because the business can charge what they want.
Microsoft is an example of a possible market failure. The U.S. Federal Gov't states that Microsoft is a monopoly who is unfairly wiping out the competition. When Windows 98 came out, they integrated Internet Explorer with it. Netscape and other browsers called this unfair and wanted Internet Explorer a separate package from windows.
Because Microsoft decided to tie in a product and since it couldn't be removed from windows due to it's integration, the US considers this case unfair for other browser makers. Microsoft makes a settlement which involves:
1. Microsoft must allow other people to remove "middleware" like Internet Explorer.
2. Microsoft must share code that allows others to make software for thier OS and other software.
3. Three compliance committee directors must overwatch Microsoft to make sure the settlement is held.
But I am not going to tell you what to think. I say free markets is that they do work, just not always the way people want them to. Others argue that the market needs a "kick in right direction" and the Federal Gov't decides to make rules and regulations to protect the USA's interests. It's a matter of political opinion.
I could really go on and on with different examples. But the wikipedia has already done that for me.
http://en.wikipedia.org/wiki/Free_market
![[Image: teisel07.png]](http://miniprofile.xfire.com/bg/bg/type/0/teisel07.png)