Question

Different countries have different market structures. Explain the different types of markets. What role does the government play in the different markets? Support your argument with practical example from any country in the world.

Answer 1

talking about two extreme types of market:

one could be where government provide everything, from bread to cars. private firms are not allowed to operate in this type of market.

other extreme end could be where private sector has full autonomy, where to invest and how much to invest.

talking about the first type, it is not necessary that government has to operate firms itself in the market. it may also possible that private firms have to take permissions (in the form of license) from the government in order to establish. government may also decide the output levels of goods produced by these firms. this was the case in India during 1950s-80s. major reason behind this government controlled market, especially in India was to utilize limited resources of the country towards consumer goods.

on the other hand USA has free market, where private sector can freely enter and exit the market. of course there are government regulations to protect the consumers from any kind of malpractice.

now days India also has free market but government regulations are a bit stricter in India than USA.