The great strength of the market is that it is a decentralised means The great strength of the market is that it is a decentralised means of resource illocation

Abstract

In this essay a decentralised means of resource allocation is going to be discussed as a strength or weakness of the market. In order to get a broad picture on this issue, we are going to bring examples of resource allocation in both market and planned economies. First, the most important authors concerned with this matter are going to be evaluated. Thus, we will review the opinions of authors like Adam Smith and Friedrich Hayek. While evaluating different positive and negative sides of the market economy, we will particularly focus on the matter raised in the question: what are the strong and weak sides of the market economy in terms of resource allocation. Finally, we will examine a particular case in order to get an understanding of how failure in resource allocation will affect centralised and free market systems.