4 ms·
On the first point, the company I have worked for for the past 15 years has had wildly different ROIs during different phases of its life. Assuming that ROI is
by tasty_freeze 7y ago
On the first point, the company I have worked for for the past 15 years has had wildly different ROIs during different phases of its life. Assuming that ROI is a fixed quantity will lead to a wrong conclusion.
On the second point, yes, free oil to Exxon will lower the price of gas, and that is a benefit to the consumer. But you assume 100% of that benefit is given to the consumer. In reality, corporations keep as much of the profit as they can and either keep it in their war chest, acquire assets, or distribute it to shareholders.
- nybble41 7y agoI did say that there is short-term variation in ROI, in particular based on risk. However all economic ventures in a competitive market do tend toward zero expected economic return, i.e. an expected ROI (including factors like risk) commiserate with their opportunity cost. Corporations obviously try to maximize their profits but they don't operate in a vacuum. If they consistently earn higher-than-normal profits then that will attract competition, pushing prices (and profits) back down toward the margin.