2 ms·

Couldn’t you just buy some more and make a killing? Couldn’t a distributor after having sold out a few times see the opportunity and make a killing? How is this

• bsder 3y ago
  There is no conspiracy here--just self interest. You could do exactly as you say. But what's your incentive? You have to invest a lot of money up front for a possible killing on the back--but you could get burned horribly. Or you can leave the system at capacity and jack up your prices for a known increase on the front with very little risk. What you are really asking is: Why don't companies face new competitors regularly? Why is there no competitor to Apple and Android? Why are Kansas City Southern and Canadian Pacific trying to merge instead of compete for each other's customers? Why are there so few auto companies? Why was there no competitor to SVB such that their portfolio became to loaded with a specific type of company? Why is there no competitor to Cal-Maine who controls almost 25% of the egg supply? The answer to that is: a combination of anti-trust and monetary policies. Lax anti-trust enforcement means it is almost always cheaper to buy a competitor than compete and put them out of business. Monetary policies in the US favored creating passive things like real-estate holdings rather than active businesses. (Side note: Future Electronics, in fact, did exactly what you would expect in the middle of the Covid supply chain breakdown. They had more inventory than average so made a LOT of money while it lasted. However, even they eventually succumbed to not having any upstream supply.)