The paper provides an introduction to market economy. In comparison to other economic systems, the most important difference appears to be the existence of market prices which are created spontaneously. Hence, prices do not only provide an incentive system, but also aggregate dispersed information. Experiments have demonstrated that the price system may render efficiency even if the strict assumptions of economic theory are not fulfilled. However, inefficiency can arise due to market failure. A further justification for governmental regulation of markets can be found in unsatisfying distributional results. The paper briefly highlights the relations of neoclassical theory with modern institutional economics as well as with macroeconomics.