In a mixed economy, both free-market and regulatory forces are at work. Some see these forces as being at odds with each other; others feel that the economy works at its peak when both forces are working together. Whatever you believe, many countries, including the United States, have both systems at work simultaneously, and the balance between the two dictates how the economy, overall, will trend.
In a free-market economy, balance is maintained strictly by market factors. There is little or no regulation - it is a self-policing group of people and businesses. Sometimes this works, but as 2008 is showing, sometimes it doesn’t. Especially in a market-based economy, where people want to make a profit, some unscrupulous folks may enhance their own profit margin at the expense of others, such as the consumer. The tendency toward profit may weaken the self-policing aspects, and the consumer may not receive the best deal.
In a mercantile or socialist economy, the economy is controlled, to some degree, by the government. In a socialist economy, the government controls all aspects of the economy as a fundamental part of its structure; in a mercantile economy, the government controls some or most aspects of the economy for “the good of the economy”. While the United States is commonly referred to as having a capitalist or market economy, in reality it is a mixed economy, since the government does have some say in setting regulation.
The advantages of a mixed economy are many. Depending on the ratio of capitalistic elements to socialist or mercantile elements, there are many freedoms in a mixed economy. People may go into business for themselves, decide what they will produce or sell, and set their own prices. Business owners and merchants pay taxes, but they reap the benefits of those taxes through social programs, roads and other infrastructure elements, and other government services.
However, mixed economies also have disadvantages, including the fact that businesspeople need to find their own markets for products, and that they are not in control of the taxes they pay. Merchants will often complain of tax rates being too high for the services provided.
Most economies today have moved to some variation of a mixed economy, though the balance toward a socialist, mercantile, or free-market economy can vary widely. In fact, most economies are in flux, moving from more regulated to less regulated over time, and sometimes swinging back in the other direction. But another strength of a mixed economy is that the balance can be altered to suit changing conditions, so mixed economy markets should endure for a long time to come.
The advantages of a mixed economy system is that the system advocates social welfare. The government considers persons well being and ensures that they are not being exploited by companies, insurance companies etc. In a mixed economic system there is some government intervention of the market as well as private ownership of property. It allows for persons' pursuit of their own happiness and self interest also.
The mixed economy is an economic system in which two sectors exist: Public and private sector. Both these sectors help in making economic system of the country. Advantages of mixed economy in that, lots of goods are available. The mixed economy helps increasing national production in the state. Both public and private sectors work to introduce more production in the market. The problems formed by free enterprise and public control are resolved with the help of mixed economy. It gives liberty of enterprise ownership and profit maximization. All the national recourses are used under mixed economy. This type of economy is half way house. It is not useful in getting best use of national resources. There lack of co-operation between private sector and public sector. In Mixed economy the public sector develop fast, therefore the government expenses increases many time ,in contrast government returns are always short for it.