Market mechanism is a term from economics referring to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade offs to produce the best distribution of goods and services. The use of the market mechanism imply in a free market; there can be captive or controlled markets which seek to use supply and demand, or some other form of charging for scarcity, both in social situations and in engineering. This is a main term when it comes to marketing in economics.In this we have three types of economy free market economy,command or planned economy and mixed economy.In free market economy all the resources are allocated by private sector(Individuals,households and group of individuals), in planned economy all the resources are owned by the public sector(local and central govt) and in mixed economy the resources are owned by both private and public sector. Resources are allocated according to the forces of demand and supply and this is known as market mechanism.
Other market mechanisms include government fiscal policy and monetary policy. Described by the Friedman rule' proposed by Milton Friedman. These policies will influence demand by price adjustments through taxes and charges, and through adjustments to the value of money by the related supply of money.