What characterizes a command economy?

A command economy is characterized by government control over production and distribution. In this economic system, the government makes all the decisions regarding the allocation of resources, goods, and services. It determines what to produce, how much to produce, and at what price to sell. This central authority aims to meet the needs of the population and can direct economic activity toward broad goals, such as full employment or rapid industrialization.

In contrast to a command economy, a free market competition system allows individuals and businesses to make their own choices regarding production and consumption, driven by supply and demand. Decentralized decision-making by individuals is a hallmark of market economies, where decisions are made based on personal and market preferences. Additionally, reliance on consumer preferences reflects the consumer sovereignty found in market-oriented economies, where producers must respond to what consumers want in order to succeed. These concepts highlight the fundamental differences between command and market economies, reinforcing why government control over production and distribution is a defining characteristic of a command economy.