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I 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 expe
by nybble41 7y ago
I 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.