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Wouldn’t a profit maximizing capitalist just invest in these unregulated pharmaceutical companies as opposed to starting an unprofitable pricing war?

• toyg 7y ago
  It depends on how much profit will be generated by investing the same amount of capital in the two activities. Say that half a mil in pharma shares return you 5% yearly; if you can generate more than that with a price-competing activity (also pricing in the risk to your capital, of course), you should do that instead. In this particular case, there are actors for whom the profit would not be directly generated by sales of goods, but by the amount they save elsewhere in their operations - which, depending on various factors, might actually be multiples.
• roenxi 7y ago
  You can't really invest, because the investment opportunity is controlled by other profit maximising capitalists who will charge an arm and a leg for the opportunity. You could find a profit maximising capitalist who would be happy to enter the market and compete for a fraction of the outrageous profits - that would make a lot more money than paying to invest as is more usual. In theory there only needs to be a handful or so and that would be enough to bring the market back down close to cost of production. However, it seems likely that government regulation would disrupt that process somehow, otherwise it would have happened by now.