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This is the case in some market systems but is no law of nature. It results in big windfall profits. High fossil prices are a very fortunate thing though as we
by fulafel 4y ago
This is the case in some market systems but is no law of nature. It results in big windfall profits.
High fossil prices are a very fortunate thing though as we need to ramp down their use quickly to mitigate climate disaster, so this system is currently right by accident.
- bryanlarsen 4y agoIt's a direct consequence of there being a single price. It generally only applies to commodities. It usually results in low profits because the cost of production does not vary wildly between vendors. Farmer Joe and Bob have roughly the same costs per bushel of wheat, so farm profits are generally quite low. Energy windfall profits are the exception, not the rule. Windfall profits are usually only found in non-commodity markets like software.