What is the Difference Between Command Economy and Market Economy?

The main difference between a command economy and a market economy lies in the control and ownership of the factors of production, as well as the decision-making process. Here are the key differences:

Command Economy:

• The government owns the factors of production and controls resources.
• The government sets prices and production schedules.
• Decision-making is centrally planned.
• The focus is on social good rather than profit.
• Inefficiency can result from lack of competition and incentives.

Market Economy:

• Private ownership is the means of production.
• Prices are determined by supply and demand.
• Decision-making is determined by the market.
• The focus is on self-interest and profit.
• Efficiency is achieved through competition and incentives.

Most countries operate as either a command or market economy, but many include aspects of the other. For example, the United States, which is considered a market economy, still has some public ownership and government control in certain areas, such as subsidies and welfare programs.

Comparative Table: Command Economy vs Market Economy

Here is a table comparing the differences between a command economy and a market economy:

Please note that most nations operate as either a command or market economy, but all include aspects of the other.