<Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> A market economy is an economic system in which the decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand . The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production . </P> <P> Market economies range from minimally regulated "free market" and laissez - faire systems - where state activity is restricted to providing public goods and services and safeguarding private ownership - to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare . State - directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning--which guides but does not substitute the market for economic planning--a form sometimes referred to as a mixed economy . </P> <P> Market economies are contrasted with planned economies where investment and production decisions are embodied in an integrated economy - wide economic plan by a single organizational body that owns and operates the economy's means of production . </P>

Who has the power in a market economy