What is a mixed economy?

A mixed economy incorporates elements of both command (government control) and market (private ownership) systems. In a mixed economy, the government may regulate certain industries and provide public goods and services while allowing private enterprises to operate in other sectors. This approach aims to combine the benefits of a market economy—such as efficiency and innovation—with the advantages of a command economy—such as equity and stability.

For example, while businesses are free to compete and produce goods and services, the government might intervene to regulate prices in essential sectors, provide social welfare programs, or prevent monopolies. This balance helps address some of the market's shortcomings, such as inequality and market failures, while still promoting economic freedom and growth. Therefore, recognizing a mixed economy as a combination of command and market elements captures the essence of this economic system, emphasizing its dual nature that is prevalent in many economies around the world today.