Why is a mixed economic system preferable?

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gsenviro eNotes educator| Certified Educator

A mixed economic system is mid-way between a free market economy and a regulated economy or between capitalism and socialism. In such a system, while the market forces determine the price (with little influence by regulators), the government intervenes to ensure social welfare. Such an economy consists of both the public and private players, who may be competing against each other and may also be cooperating on some projects. The advantages of a mixed economy are optimal resource allocation, balance between the private sector and government and social welfare. Since there is competition between private and public sector enterprises, resources are optimally distributed among the best players and any aberrations are corrected by the government's intervention. The two types of players (private and government) can compete or collaborate on projects, thereby providing them equal footing and ensuring that no single player has monopoly. The government intervenes, as and when needed, to ensure that society as a whole benefits and controls excess prices, monopolistic tendencies, malpractices, etc. This ensures that social welfare is achieved.