What is a Free Market?

The BusinessPundit started me thinking about what makes a free market. He thinks that a free market rewards innovation, aesthetics, safety, and lots of other things. But if it truly rewards innovation, then the first-movers would win more often; and if it truly rewards aesthectics, then we’d all use Mac’s. It seems to me that the strength of a free market is that it doesn’t actually reward anything in particular.

Pursuing that line of thought, a free market is governed by rules that do not dictate the winning strategy. The free-ness of a market is in some sense a measure of the number of winning strategies that can exist. And the wonder of a free market is that many winning strategies are not yet known.

The free market only rewards efficiency when everyone competes on price. If you can successfully compete on different terms, then the free market will reward different traits.