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Technological Efficiency and Free Market Economies

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TECHNOLOGICAL EFFICIENCY AND FREE MARKET ECONOMIES
Evans Gwaro
Kisii University
15th July, 2016

Technological Efficiency and Free Market Economies
Betz (2011) defines technology as the ability to influence any piece of knowledge to suite the best interest of human nature. While, on the other hand, Zupan (2011) refers a free market to system in which the prices for goods and services are agreed freely by accord between vendors and users, in which the rules and requirements on supply and demand are not interfered with by the authorities, price-setting monopoly, or other power. Free markets have various merits. The most accepted is the extension of individual choice, through commonly appreciated give-and-take situation. Subsequently, free market differs with a regulated market, where the government intercedes in supply and demand through non-market approaches that include regulations forming obstructions to market entry and/or directly setting prices. As such, the concept of a free market is where prices are structured by the equivalent demand and supply opportunities.
Subsequently, as aforementioned, the influence of choice which enshrines to the free market alignment employs preeminent use of discrete entrepreneurial skills which inspires technology advancement. Essentially, in a free market economy, there are three components that include competition, active but limited government, and the self-interest. Competition in the market place provides quality goods to consumers and at affordable prices. Upon invention of a new product, the initial prices are usually high for some time. But once other firms instigate similar products, the price of the same product goes down as there is variety in the market. Hence, as competition intensifies, the substandard products will be eliminated from the market to pave way for better ones. Free market aids technology improvement through strong rivalry which pressures businesses to produce high quality products and services at reasonable rate and further through the recognition and procedure of modern expertise. Hence, where demand and supply intersect, is what is referred to as the natural price of the product (Mosca, 2006).
Trade liberalization engages best utilization of technology and other resources, which gives rise to the theory of comparative advantage. When states focus in generating goods and services in which they are proficient, they can produce these at a lesser rate as compared to other countries. Trade liberalization thus leads to improved success which can benefit the lowly and the highly placed in society; third world countries will gain more from conducting business in a free market structure than not engaging in business at all. Miranda & Klement, (2009) opine that all businesses exist to generate positive gains. Henceforth, in a free market, an industrious business realizes a dependable return in a field of challengers. The indication of rivalry is an essential factor of a free market arrangement. However, in a free society, you do not prosper by having the right concepts; you succeed by having the confidence to defend such concepts when subjected to attacks and to see them through when the professionals are advising on settlement (Murdoch, 2010).
Various features of free market construction are associated with the perfect competition economies which are conducive to technological advance. Large firms operating under free markets enables them to sponsor huge research and development costs associated with major product or process innovation. Products like autos, televisions, and computers were not very useful when they were first devised, but ensuing enhancement through research and development led to better, cheaper, and more useful. These enhancements have produced really large improvements in welfare. For instance, according to Tan & Phang (2005), 99% of today’s totaling power is due to incremental improvements in the technology rather than major breakthroughs. Further, free-market innovation machine routinizes the process that produces 99% of this innovation.
In a free market, the entrepreneur risks to set up a business, investing capital, guided by immense optimism that the said product or service will lead to greater gains. For instance, where the possibilities involved are assessed from the negatively but the business prospers, then the gains made and management of the business subsequently will be the proprietors call, and not the government (Agrawala, 2009). Therefore, the biggest benefit of competition in free markets is innovation: fresh, enhanced and economical goods and services, or restored and cut-rate methods of making them available. Businesses that are continuously subjected to rivalry will be forced to invent, such as mobile service providers. While on the other hand, the one that are government owned or managed will not be obligated to venture into more innovations.
In conclusion, a sound freer market construction upholds invention as accompanied by products and services, the streaming of business circulates novel concepts. Consumers can benefit because firms in a free market should carry on with the leader so as to maintain clients or transform to generate their private role. Recognized private property rights provide the legal certainty required for individuals to commit resources to ventures (Boettke, 2005).

References
Agrawala, K. (2009). What are the advantages and disadvantages of a free market economy? And what are the roles and needs in the business cycle? Retrieved from http://www.enotes.com/homework-help/what-advantages-disadvantages-free-market-eco-389689
Betz, F. (2011). Managing Technological Innovation: Competitive Advantage from Change. John Wiley & Sons. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/9780470927564.ch11/Pdf
Boettke, P. (2005). The Role of Private Property in a Free Society. Virginia Viewpoint, 2005-2.
Miranda, R., & Klement, J. (2009). Authentic trust in modern business. The Journal of Wealth Management, 11(4), 29.
Mosca, M. (2006). On the origins of the concept of natural monopoly.Università di Lecce Department of Economics Working Paper, (92/45).
Murdoch, R. (2010). We must learn to cherish opportunity and creativity. Retrieved from http://www.theaustralian.com.au/opinion/we-must-learn-to-cherish-opportunity-and-creativity/story-e6frg6zo-1225942450126
Tan, K. S., & Phang, S. Y. (2005). From efficiency-driven to innovation-driven economic growth: perspectives from Singapore (Vol. 3569). World Bank Publications.
Zupan, M. A. (2011). The virtues of free markets. Cato Journal, 31(2).…...

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