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No, it's not what the market price would be in a system with a plurality of buyers. The demand side of the equation is heavily skewed when a single entity has
by marcoperaza 11y ago
No, it's not what the market price would be in a system with a plurality of buyers. The demand side of the equation is heavily skewed when a single entity has the authority to make purchasing decisions for effectively the entire population. And since marginal costs are so low, the company is in a position where even a price that doesn't recoup their total unit costs is better than no sale at all to a population of tens of millions.
- yason 11y agoThe fact that trade does take place proves that a market exists. Obviously it's a different market, selling to larger establishments or even countries versus selling to small retailers. Similarly goods markets and prices are slightly different in big cities versus remote country villages. But a market is a market, and when a trade closes that's the market price. If the merchandise and the price paid for it didn't benefit both the company and the buyer, there would be no trade.
- marcoperaza 11y agoAny system with buyers and sellers is a "market", that's a meaningless standard. If all of the insurance companies in the US decided to merge and use their leverage to lower drug prices, it would be an illegal cartel. The resulting price would be the "market price" but not the price that would exist in a free market, which in most definitions includes prohibitions on such cartels. Governments can get away with it because they write the rules and there's no higher authority to stop them.