Following are the characteristics of mixed economy :

• Coexistence of public and private sector : The most important characteristic of this economy is that both public and private sectors coexist in this. Both the sectors work together. Industries of national importance, such as, infrastructural industries, arms and ammunition industry, electricity, etc. operate under the public sector, while consumer industries, cottage industries, agricultural industries, etc. operate under the private sector. The major objective is extending mutual cooperation to one another as these industries are complementary to each other in economic development. 
• Private property economic and economic equality : On one hand, an individual has the freedom to accumulate and own private property, while, on the other hand, the government also forms strict policies to maintain equality in distribution of income and wealth. On one hand the government levies income tax, property tax, etc. on private property and establishes its control and on the other hand, it provides welfare schemes such as old-age pension, basic facilities, etc. to poor people. 
• Price mechanism and imperative control : Both, price mechanism and imperative control operate in mixed economy. Through price mechanism, powers of demand and supply operate the economy. Determination of price of goods is done through demand and supply. Major economic decisions, such as what should be produced, in what quantity, how it should be produced and for whom it should be produced, etc. are made by price mechanism.
• Motive of personal benefit and social welfare : A mixed economy operates taking in view both objectives, i.e. motive of personal benefit and social welfare. Production is done with the motive of earning profit, and just like socialist economy, the major objective of planning system is optimum social welfare. If private industries do not work for public welfare then the government nationalizes them and transfers them from private sector to public sector. 
• Controlled economy : In order to maintain equal distribution of income in the economy, various policies such as levying progressive taxes, undertaking works of social security, controlling monopolistic tendencies, etc. are adopted. Maximum limit on land ownership is also determined.
• Economic planning : In a mixed economy, socio-economic objectives are obtained through economic planning. In the absence of planning, no economy can be considered to be a mixed economy, even if government interference and control exist in it. Major economic decisions are taken through planning itself.

Merits of both, socialism and capitalism are found in mixed economy as can be noted as follows:

• Adequate security : In mixed economy, an individual enjoys adequate security in economic spherean individual can spend his income freely, and can choose any occupation according to his interest and qualification. Freedom of obtaining personal benefit and owning property exists to a certain limit. Barring prohibited areas, an individual is free to start any business as per his discretion. 
• Decline in economic disparity : Economic disparity is a curse for any economy. The government imposes progressive taxes to decrease economic disparity in mixed economy. It makes efforts to check monopolistic tendencies, so that economic equality may be established in the society. 
• Efficient division of resources : In mixed economy, both public and public sectors work jointly and try to use the resources in an optimum manner. The private sector tries to make optimum use of these resources with the motive of earning profit. The public sector uses these resources with the objective of maximizing social welfare. Therefore, a mixed economy establishes coordination and balance between personal benefit and social benefit.
• Economic equality : In mixed economy, effort is made to obtain the objective of economic equality without sacrificing economic freedom. Check is imposed on increasing prosperity of the private sector, and efforts are made to establish social security and economic equality in its place. 
• Protection from exploitation : Mixed economy makes efforts to free the poor and middle class of the society from monopolistic tendencies and the exploitation perpetrated by the landlords. It forms welfare schemes for private workers and farmers. It forms laws and develops cooperation between various socio-economic groups. 
• Planned and rapid economic development : Indeed, price mechanism does work in a mixed economy, but not in complete freedom. Appropriate surveys regarding the availability of resources in the country is done, planning is done about how to use them and their partnership in economic development is fixed. As the public sector plays an important role, balanced economic development of the country takes place and capital formation gains momentum.