Sunday, July 01, 2018

Limitation of the free market

Many people believe that it is best for prices to be determined by the free market.

I agree with this thinking provided that the market is really free and there are many suppliers and customers.

But some markets are not suitable to be left to the free market because the supplier has a stronger market power or the customers lack do not have the information.

Examples of the unbalanced market include the following:

a) Property market - where the main suppliers are the government or a few big developers.

b) Health care market where the doctors have the knowledge and the customers have to rely on the doctors.

If the government fails to carry out its duty or they have a conflict of interest (being a key supplier with a profit motive), the prices can get out of control. This is what has happened in Singapore.

An example where the free market works well is the restaurant and food business. The customers are able to decide on where to eat and there are adequate choices.

Tan Kin Lian

1 comment:

Anonymous said...

u r rite

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