> Economics don't tell you that competition dilutes profits, it tells you that competition drives down prices until profits are zero, which isn't the same thing

> Economics don't tell you that competition dilutes profits, it tells you that competition drives down prices until profits are zero, which isn't the same thing. Dilution is a process that happens over a time interval. In that sense, Thiel obviously is referring to dilution in profits per time interval moving forward. So driving the prices from X to 0 per time interval is diluting profits in that sense. And if one looks at a very large, long term view of things, overall profit will be competed away too. So in a perfect competition, assuming the person shuts business with no loss, all capital ever earned will be competed away. Because competition typically drives prices way below the point where profits are 0, it drives it down to the point where overall profit ever earned is 0. Companies frequently sell at loss for market share.