Difference between Market Economy and Command Economy


An economy is only a structure inside which financial exercises are attempted. It is that framework working in the country which arranges, organises, and balances the monetary exercises, for example, creation, conveyance, utilisation, and trade of products and services, to address the issues of individuals.

The financial arrangement or the economic system of usefulness and presence is vital in the economy. It deals with how and when to deliver the merchandise, the types of products to be created, and who delivers the products. Government regulations, freedoms or rights of the customers and makers will likewise be considered by the monetary framework.

The financial framework or the economic system incorporates the command economy, market economy, and mixed economy. The significant choice will be taken by the public authority or individual of supply of merchandise, valuing of products, etc.

Both command economy and market economy are the two furthest edges of the monetary setting. The fundamental contrast between these two lies in the manner not entirely in a particular way, division of work, government impedance, income distribution, and so forth.

Meaning of Market Economy:

The market economy is one of the financial frameworks where the monetary choices are taken by private sectors or by individual organisations or on many elements, including the products. The monetary law or the economic law of supply assumes a fundamental part in making financial choices.

The purchaser and merchant will choose the cost of products; from time to time, negotiation likewise occurs. In this framework, they sell the merchandise at a most extreme value, which is viewed as the most elevated sensible cost to make the shoppers or end-user purchase the products.

The market economy chips away at the hypothesis of the demand and supply law. Here, land, capital, merchandise, and work are claimed by people or organisations. Considering the shopper’s inclination, the products and services will be provided. Whenever a request or the demand is high, the market economy produces products at the most extreme value that purchasers can purchase and procures more benefit.

Meaning of Command Economy:

The command economy is another monetary framework where the choice lies at the fingertips of the public authority of a country. The law of supply assumes no part in this framework.

In the command economy framework, there is a contribution of the political framework as well. The choice to efficiently manufacture items disregards the inclination of the shopper. Here the products and services they produce can be obsolete, and the cost will be chosen by the public authority, remembering that everybody can bear to purchase it in the country.

Command economy is more centred around macroeconomics and social targets than creating a profit. It controls the cost and analyses to the market economy, and it gives less motivating forces to its effective makers or producers. The benefit will be assumed by the public authority.

Difference between Market Economy and Command Economy:




Market Economy is one in which the interest and supply powers choose the development of products and services and their costs.

Command economy alludes to a financial framework, where every single monetary choice is taken by the public authority, and enterprises are publicly owned.

Security of the Economy

Individuals are answerable for their monetary security.

The government ensures financial security.

Economic Equity

Individuals can unrestrainedly pick their work and utilise their assets and capacities.

Individuals can’t unrestrainedly pick their work or change occupations.

Allocation of Resources

Chosen by consumers and factor markets.

Chosen by central organisers.

Decision Regarding Production

In light of buyer interest or demand in the market.

The state chooses the manufacturing.

Objectives of Goods Production

Benefit objective.

Social goal.

Income Inequality



Rate of Growth

The rate of financial development is high.

The rate of financial development is low.

Factors of Production

Owned by firms and private people.

Owned by the public authority.

Price Mechanism


Not utilised.

Managed by

Consumers and manufacturers.



Both the command economy and market economy are monetary frameworks that assume a significant part in the advancement of the economy in the country. In the command economy, the public authority settles on choices on the creation and controls the cost to keep up with correspondence in the public eye. In the market economy, the purchaser or dealer settles on creation. The merchandise will be fixed at the most extreme value that buyers can bear.

The greater part of the nation follows the blended financial framework for the fast development of the economy in the country. There are a few nations even now that follow just the command economy, for example, North Korea, Cuba, so on.

Each financial setting targets fulfilling the requirements and needs of its kin by effectively utilising its scant assets. In a market economy, the public authority has next to zero impact over monetary exercises, while in a command economy, the government has full command over financial exercises.

Both the command and market economy are great to keep up with amicability in the nation and for the advancement of each person in the country.

Also, see:

Meaning of Economic and Non Economic Activities

Central Problems of Economy Study Material

What Is Secondary Data Meaning and Sources

Sources and Problems of Human Capital Formation

Importance of Human Development Index

Precautions to Be Taken Before Using Secondary Data

Meaning and Reasons for International Trade

Meaning and Characteristics of Index Numbers

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