The free-enterprise system discourage entrepreneurs who waste resources because the government penalizes them.
Private property rights, voluntarily entered into contracts, and open bidding for products and services in the marketplace are the defining characteristics of free markets, both in theory and in practice. Contrasting this framework are public property ownership, coercive behavior, and fixed or controlled distribution of goods and services.
Free enterprise is often connected to philosophical libertarianism and laissez-faire capitalism in Western nations. Free enterprise is different from capitalism, though. The production and distribution of limited resources is referred to as capitalism. The term "free enterprise" refers to a set of laws governing business dealings.
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