ECON101: Analysis of Traditional, Command, Market, and Mixed Economies

This essay provides an overview of four primary types of economies: traditional, command, market, and mixed. It begins by defining each type, highlighting their unique characteristics and operational methods. Traditional economies are rooted in cultural beliefs, while command economies are centrally controlled by a government. Market economies, also known as capitalist systems, are driven by supply and demand with minimal government intervention. Mixed economies combine elements of both market and command systems, often with government involvement in specific sectors. The essay emphasizes the efficiency of market economies in allocating resources and fostering innovation. It also references key economic concepts such as equilibrium, market forces, and comparative advantage. References include key economic literature. This assignment is an excellent resource for students seeking to understand the fundamental structures and functions of different economic systems.

Running head: TYPES OF ECONOMIES
TYPES OF ECONOMIES
Name of Student:
Name of University:
Author Note:

1TYPES OF ECONOMIES
Introduction
Each economy has its own resources and its way of operation. Every economy in the
world is unique and different from each other based on its economic and market structure.
Economies are not similar, although they share some common characteristics. Economies are
broadly identified into four types which are given below.
Types of economies
Traditional economic system
This is the most traditional form of market structure where goods are produced as per the
traditional belief of the people. Generating economic surplus is rare societies under such forms
are close knit.
Command economic system
In this system, a greater portion of the economy is governed by a centralized power and
focus more on resources like oil. The government is actively involved in planning and
redistribution process. The government owns most of the critical industries like aviation, railroad
and aviation, although government has the power to create jobs for the people.
Market economy or capitalist system
The production of goods and services are dependent on the demand and supply forces of
the general market and does not have a central planning. It has been said that the movement of
goods and services are based on invisible hand such that market forces of demand and supply
automatically adjusts itself towards the equilibrium state (Trainer, 2016). The market is free from

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government intervention and is considered as the most efficient type of economy which is
advantageous for generating economic profits.
The buying and selling of customers and individuals occurs at market place where buyers
and sellers interact to determine price of a commodity. The capitalist economy is described as the
best economy which helps in generating economic profits. Businesses and individuals own
capital goods that is then marketed in the economy. Decisions relating to investment are made by
every owner of property, wealth and production ability with respect to capital and financial
markets (Streeck, 2014). Equilibrium price and output is determined by competitive forces such
that it pushes price upward during higher demand and lowers price as the demand falls.
Mixed economic systems
Mixed economy is a combination of different types of economic systems that lies
between maxed and command economy. The market structure is not fully controlled by the
government and generation of surplus is possible. It incorporates policies that are both socialist
and capitalistic in nature (Geissdoerfer et al., 2017). Government has ownership in several
sectors like transportation, defense and rail roads. Government also has the authority to regulate
private businesses.
Conclusion
Market or capital economic system is very effective as it not regulated by government
and market forces balance the equilibrium. Private business have the flexibility to operate
business without seeking government permission which can increase the efficiency of the firms.
It leads to efficient allocation of goods and services in the economy. This system helps business
to innovate and built new products (Bauhardt, 2014). Entry of new firms is nor regulated in this

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system and technological innovation is highly supported. Firms produce goods in which they
have a comparative advantage such they are able to produce goods at lower cost and export them
without government regulation.

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Reference List
Bauhardt, C. (2014). Solutions to the crisis? The Green New Deal, Degrowth, and the Solidarity
Economy: Alternatives to the capitalist growth economy from an ecofeminist economics
perspective. Ecological economics, 102, 60-68.
Geissdoerfer, M., Savaget, P., Bocken, N. M., & Hultink, E. J. (2017). The Circular Economy–A
new sustainability paradigm?. Journal of cleaner production, 143, 757-768.
Streeck, W. (2014). The politics of public debt: Neoliberalism, capitalist development and the
restructuring of the state. German Economic Review, 15(1), 143-165.
Trainer, T. (2016). Another reason why a steady-state economy will not be a capitalist
economy. Real-World Economics Review, 76, 55-64.