In a market economy, the allocation of resources for various purposes is based on a system of prices affected by supply and demand rather than government planning. The most prominent features of this type of economy are private property, freedom, self-interest, competition and limited government intervention. These systems have a wide range of advantages, including efficient resource allocation, consumer sovereignty and economic growth. However, they also have disadvantages such as inequality, negative externalities and lack of public goods.
The main driving force of a market economy is consumer preference and freedom of choice. As a result, companies produce products that consumers want and are willing to pay for. This creates competitive forces that motivate businesses to innovate and provide quality and affordability.
This economy is also characterized by cutthroat competition, and success depends on the ability of individuals to make their own choices for themselves. However, it can be difficult for those inherently disadvantaged to compete in the marketplace, such as elderly people or those with disabilities who need to spend time taking care of themselves rather than working to earn money. Their caretakers are then also at a competitive disadvantage, having to choose between taking minimum wage jobs to support their families and caring for those with special needs.
Furthermore, there is no inherent system that cares for those at a competitive disadvantage, as a consequence of which they cannot contribute to the economy in any way. As a result, some markets become distorted in such a way that those with the most resources keep getting richer, while the poor stay stuck with minimal incomes.