To define the mixed economic system and outline its key features.
Definition
A mixed economic system is an economic arrangement in which both the private sector and the government play significant roles in the allocation of resources, production of goods and services, and distribution of income. It combines elements of market (capitalist) economies and command (socialist) economies.
Key Characteristics
Co‑existence of private enterprises and state‑owned enterprises.
Market forces determine most prices, but the government intervenes to correct market failures.
Regulation and legislation are used to protect consumers, workers, and the environment.
Public provision of essential services such as education, health care, and infrastructure.
Fiscal policies (taxes and subsidies) are employed to influence income distribution.
Comparison with Pure Systems
Aspect
Market Economy
Command Economy
Mixed Economy
Resource Allocation
Determined by price mechanism and profit motive
Determined by central planning authority
Combination of market signals and government planning
Ownership of Resources
Predominantly private
Predominantly state‑owned
Both private and public ownership
Role of Government
Limited – mainly to enforce contracts and property rights