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There are lots of inelastic markets, and I'd agree they do often suffer from short-term price volatility, but the US healthcare market suffers from longer-term
by nickff 6y ago
There are lots of inelastic markets, and I'd agree they do often suffer from short-term price volatility, but the US healthcare market suffers from longer-term price 'anomalies', which I believe are a product of its unique regulatory landscape.
- Xylakant 6y agoOther markets with inelastic demand and/or supply also suffer from long-term price anomalies: take housing/rental in SF. There’s certainly some more contributing factors that make an inelastic market turn into a problem, but it’s fairly obvious that it’s not governed by the regular “simple” market explanation of supply and demand converging to a price point if the demand is essentially fixed.
- nickff 6y agoHousing and real estate have a regulatory environment which may be as Byzantine as that in healthcare! Real estate is a little 'better' because you have competing regulatory regimes which serve to (somewhat) moderate the extremes, but it's still quite bad. If you're looking for a contrasting inelastic market (one with a simpler regulatory landscape), I'd look for other industries with high capital costs, such as semiconductor manufacturing.