A free market is an economy where there is little or no government interference in the laws of demand and supply and the consumers have the most influence in the economic activities. This economy presumes that economic and social agents, are logical when it comes to their own preferences and fully capable of making decisions central in pursuing all their economic interests (Tetreault, 2016).The free market economy is based on spontaneous and decentralized economic decisions made by individuals. In this economy, competition is unhampered and transactions occur privately between buyers and sellers.
An example of free market economy is laissez-faire capitalism and voluntary exchange socialism. These are both characterized by the absence of coercion impositions or limitations regarding economic activities hence transactions between buyers and sellers happen freely and willingly without any interference from a central power. Most countries' economies constitute of both free market and command economies but a country's free economy may range between very large markets or entirely black market. According to the 2019 Index Of Economic Freedom, Hong Kong is considered to have the most free economy ranking at 90.2% economically free with extremely low tax rates, highly capitalist system of economy and minimum business regulations (Miller, Terry, Kim and Roberts, 2019). Equatorial Guinea, Algeria, Zimbabwe, Bolivia and Timor-Leste have the least free market economies.
Miller, T., Kim, A. B., & Roberts, J. M. (2019). Index of Economic Freedom (Washington, DC: The Heritage Foundation, 2019).
Tetreault, D. (2016). Free-market mining in Mexico. Critical Sociology, 42(4-5), 643-659.
Chappelow J. (2020). Free Market, Investopedia retrieved on Apr 28, 2020: