A free market is a market where prices are determined by supply and demand, with little or no government control. Free markets contrast with controlled markets in which prices, supply or demand is directly controlled. Various economic theories require specific properties of free markets, for example, a perfect market with perfect information and perfect competition. Regulation which does not affect these specific properties can be in place without disqualifying the market as free under supply and demand.

Although free-markets are commonly associated with capitalism today, free markets have been advocated by socialists and have been included in various proposals for market socialism where market allocation of capital is combined with self management in enterprises, and employee-owned cooperatives or publicly owned enterprises operate in free markets.

In the marketplace, the price of a good or service helps communicate consumer demand to producers and thus directs the allocation of resources toward satisfaction of consumers as well as investors. In a free market, the system of prices is the emergent result of a vast number of voluntary transactions, rather than of political decrees as in a controlled market. The freer the market, the more prices will reflect consumer habits and demands, and the more valuable the information in these prices are to all players in the economy. Through free competition between vendors for the provision of products and services, prices tend to decrease, and quality tends to increase.^{[citation needed]}