What are the disadvantages of a free market economy?

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  1. No provision of merit goods like education, health, housing... so the poor will be deprived of the merit goods. In this way the rich becomes richer and the poor becomes poorer.
  2. No provision of public goods (bus stop, garden, street lighting, army, police, fire services) important requirements for public goods not provided since it is not profitable to produce as consumers are not directly willing to pay for them.
  3. Over consumption of demerit goods (drugs, cigarettes, alcohol) if consumers have a preference for these goods, then they will be provided given that they are profitable to produce.
  4. Social cost ignored e.g. private firms ignore negative external factors (air, water and noise pollution, road conditions etc;)
  5. Wastage of resources
  6. Social injustice
  7. Economic instability
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