In a command economy, the production, distribution, and price of goods and services are all under the direct authority of the government. Several things are prohibited in a command economy, such as private ownership of major industries, mechanisms of the free market, private business decisions, and trade restrictions.
Private Ownership of Major Industries: In a command economy, the state usually owns and controls the major industries, including manufacturing, transportation, and energy. Often, private ownership of these industries is forbidden.
Mechanisms of the Free Market: The role of the free market in establishing supply and demand is restricted or eliminated. The government determines production targets, allocates resources, and controls prices, providing little opportunity for market-driven competition.
Private Business Decisions: People or companies can't decide for themselves what to produce, how much to produce, or how much they should charge for things. The government makes these choices, which limits the independence of entrepreneurs.
Trade Restrictions: International trade may be strictly regulated. Import and export activities are typically controlled by the government, and private foreign trade is sometimes forbidden or severely restricted.
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