Disadvantages Of Market Economy

Main drawbacks or disadvantages of market economy can be highlighted as follows:

1. Wealth Disparity

One of the major drawbacks of market economy is unequal distribution of wealth. It widens the gap between wealthy and poor individuals. Rich people become more wealthier and poor become more poorer.

2. Distorted Investment

Producers invest their capital only in profitable sectors. So, factors of production are not employed adequately in public sectors like education, health, transportation etc. 

3. Workers Exploitation

In market economy, workers are highly exploited by the producers. Bad working condition, no safety measures, long working hours and less wage payment are the major problems of workers.

4. Economic Instability

Because of the lack of control, regulation and supervision, market economy may create uncertainty and instability in the whole economy of the country.

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Advantages Of Market Economy

5. Poor Quality Goods

Main motive of market economy is profit maximization. So, producers can make low quality products to earn more profit.

6. Monopoly

Large producers can dominate the market by eliminating the rival companies. It may create monopoly in the market.