•Product markets provide the best signals for investments in new activities
•Labor markets respond to these new industries in appropriate ways
•Producersknow best what to produce and how to produce it efficiently
•Product and factor prices reflect accurate scarcity values of goods and resources now and in the future.
•Competitionis effective, if not perfect
•Technologyis freely available and nearly costless to absorb
•Informationis also perfect and nearly costless to obtain.