Literature Review: Economics

Literature Review: Economics

According to Armstrong et al. (2015), a market is an institution or rather a social structure. Therefore, a market provides a social platform where people have the opportunity to produce, purchase and at the same time buy goods and services while exercising freedom with no limitation of any nature by others. For markets to be safe, they need people to secure the property. Similarly, markets operate on the basis of demand and supply forces. Demand for supply triggers for the production, buying and selling of the goods and services. Armstrong et al. (2015) outlined that when there is an optimal distribution of resources in both demand and supplies in a society, and that the market is free from either unnecessary regulation nor limitations (free market from government intervention) there is social efficiency.

In these circumstances, it is notable that the government creates markets by limiting intervention in a concept referred to as liberal democracy. However, Vogel, (2018) notes that if the market is not regulated totally, markets will not thrive. The rationale is that property will not be secured, consequently stealing, tax evasion will increase, and the business would suffer. Importantly, it is worth noting that the business will require the rules and norms for regulation.

The constitutional provides many principles for the governance of the people. For instance, there is the principle of sovereignty, derived from the social, philosophical works of Thomas Hobbes and John Locke among others. Additionally, there is the principle of limited government and the general principles of democracy. As Mintrom, (2012) noted, the principle of democracy and the limited government primarily denotes the platform in which the government’s success positively. This notion falls under the concept of limited regulation and liberal democratic markets thus market thrives. However, failures arise when the government exceeds its powers and introduces excess intervention. Usually,  are many goods are typically available in the markets. For instance, there are rivalrous goods, congestible, toll, and excludable and public goods among others. Excludable goods include things like cars while public goods include items such as public goods. Generally, the government is mandated to provide such public goods for societal efficiency.

Furthermore, proper functioning of the market is denoted by the capability for the market to run efficiently, as noted by Kotler et al. (2017) that the consumers and open market determine a good market. Several laws also guide markets. There is the law competition which triggers improved goods and the law of self-interest which makes people work for their benefits and finally the law of supply and demand. Fundamentally, the United States provides many elements. Some of the core elements are the separation of powers, due process, judicial review, equal protection of the law, checks, and balances freedom of speech and democracy (Rossiter, 2017).

Separation of power concept ensures that each branch of the government is independent. Checks and balances impose the need for government agencies to corporate and support economy. On the other hand, there is the element of limited government. This element of the constitution provides that the population has the required freedoms, power and equal rights with little interference. Checks and balances are to ensure that the principles of democracy are adhered to and individual rights are respected (Mintrom, 2012). Additionally, the principle of the due process ensures that there is justice, legal rights are protected, and when there is an abuse of business transactions and process are violated; justice will be acquired through prosecution or court trial process.






Armstrong, G., Kotler, P., Buchwitz, L. A., Trifts, V., & Gaudet, D. (2015). Marketing: an introduction.

Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing. Pearson Higher Education AU.

Mintrom, M. (2012). Contemporary Policy Analysis. Oxford University Press

Rossiter, C. (2017). Constitutional dictatorship: crisis government in the modern democracies. Routledge

Vogel, S. K. (2018). Freer markets, more rules: Regulatory reform in advanced industrial countries. Cornell University Press.