What is a Free Market?

The free market is a supply-and-demand economic system with little or no government intervention. It is a summary of all voluntary trades that occur in a certain economic context. Individuals make economic decisions in free markets, which are characterized by a spontaneous and decentralized order of arrangements. A country’s free-market economy can range from very big to totally black market, depending on its political and legal norms.

Free markets are markets that have none or little restrictions that limit or tax the transactions between parties.

In reality, there are almost no true free markets. Markets are typically regulated or taxed, even if in a minimum form, by the state. The most common restriction is taxes.

In addition to taxes, other factors that restrict markets are, among others.

  • Quotas

  • Protectionist laws

  • Entry costs

  • Exit costs

  • Quality controls and regulations

  • Banning of products