When free trade is implemented, there should be no barriers from the governments on the trade. But countries together with the big companies sometimes enter the poor countries and capture a bigger market of a product which leads to a monopoly and poor become dependent again. Finally the rich put sanctions on the poor so they cannot stand up again on their own. Therefore Free trade is subjected to criticism among the people as well as among the critics. Kulkarni (2013) proves this idea by saying that there is no country who adopts Free trade as it is.
While free trade aims at attracting more consumers to increase sales turnover and generate more profits, fair trade aims at educating the consumers about the benefits of producing goods without the exploitation of labour or the environment. Thus, fair trade mainly thrives on the demand created by the consumers for such products. Free trade can benefit everyone, the developed and developing world. (Hufbauer, 2008) Free traders believe the best way to lessen poverty in the long run is to permit free trade while fair traders think that opening trade will even further make rich nations becoming richer and poor nations becoming poorer. But there are many ideas on having a managed fair trade which will generally result in sustainable long-term prosperity and equality between
Role of money in socialist economy: In a socialist economy, the government owns and controls the means of production and distribution. Factories, farms, mines, financial institutions, means of communication are controlled by state corporations. In a socialist economy, money does not operate freely. Rather it works under the regulation of central planning authority. Mechanism of price in a socialist economy: Various elements of price mechanism such as cost, prices and revenues all of them are planned and are calculated by the authorities keeping in view the goals and targets.
This is because if the company is caught funding projects outside the law or even caught embezzling, they will be sued by the public; thus causing the government to begin the investigationsinto any wrongdoing. Thirdly, most shareholders have less control as small stocks whilelarger institutions have the power. In theory, the company is democratic, but in practice it is controlled by oligarchy when few persons hold authority in order touse the mass. Thus, it does not promote the interest of the shareholders in general. Fourthly, the company is vulnerable to take-over, which is a term that only occurs when other companies have made efforts to assume control of the undervalued private company through purchasing by majority stakes.
Regulation is usually considered necessary in areas where private enterprise has been granted a monopoly, such as in electric or local telephone service, or in other areas where there is limited competition, as with the railroads. Public policy allows such companies to make fair profits, but constraints their ability to raise prices "unfairly" because the public depends on their services. Often control is exerted to protect the public, for example, when the Food and Drug Administration bans harmful drugs, or requires standards of quality in food. In other industries, government sets guidelines to ensure fair competition without using direct
Petronas in the home country will be called licensor and the foreign manufacturer will called licensee. This mode of entering the market is less costly. Petronas will be able to choose any international location and enjoy the advantages without incurring any obligations and responsibilities of ownership ,managerial ,investment etc. Advantages • Low investment on the part of licensor(petronas). • Low financial cost to licensor.
The government also controls the price for certain goods ans services, this is a major advantage so that customers can get their basic needs at a fair price. A mixed economy is prone to have less income inequality because government intervention seeks to distribute the country's wealth. Major advantages lay in the fact that if a sector in the economy is bad, the government takes the initiative to improve it, especially agricultural industries, education, banks and merit goods. Prices in this type of system also tend to be better because the government keeps away from having monopolies; competition improves price. The disadvantages in this system are high levels of black marketing and dishonest dealings because the government does not have full intervention to control these industries.
A market economy is a type of economic system where supply and demand regulate the economy, rather than government intervention. A genuine free market economy is an economy in which all assets are claimed by people. The decisions about the allocation of those resources are made by individuals without government intervention. There are no completely "free-enterprise" or market economies. The United States has more characteristics of a market economy than a command economy, where a government controls the market.
Willingness on the part of consumers to pay for ‘demerit goods’ Inequality of power in the market. Open merchandise may not be accommodated in Market economy; accordingly the legislature will need to meddle to give these sorts of products. Market economies empower utilization of destructive products Costs are controlled by the interest and supply of merchandise. Social expense may not be considered while delivering merchandise and services. It may prompt unemployment on the grounds that machines will be more profitable than men.
In mixed economics, buyers and sellers use money to exchange their goods and services while government played an important role to collect taxes and produce services. On the other hand, pure capitalism is more to economic individualism in which everything will be decided by individual. They can do what they think is best for their own production and produce anything that they like. Furthermore, the role of government is limited only to produce law and as mediator to control the