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Benefits:

  • Allocative and productive efficiency: Since free market operates on demand and supply, at any time, there will be a productive efficiency (where average cost is minimum) and allocative efficiency (where society welfare is maximum.)
  • Doesn't need to manage: Since price acts as a signal (to change production and consumption level) and an incentive (to produce), there is no need to manage and research each of those demand - which often leads to misinformation (as happened with planned economy.

Drawbacks

  • Market failures: Free market creates room for market failures include demerit goods/ merit goods/ public goods/ monopoly/ externalities.... which can harm the society as a whole.
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