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What about industries where it is difficult or impossible to crack without a large investment? In that case, new competitors might arise from established compa
by drdec 3y ago
What about industries where it is difficult or impossible to crack without a large investment? In that case, new competitors might arise from established companies expanding vertically, but very few can come from brand new companies.
Might be the kind of thing where more nuanced legislation helps, e.g. allowing vertical expansion if there are few existing competitors but disallowing it for healthy markets.
- Timon3 3y ago> What about industries where it is difficult or impossible to crack without a large investment? In that case, new competitors might arise from established companies expanding vertically, but very few can come from brand new companies. Established companies are always free to create a new company which is structured in a way that it is not vertically integrated. And so what if a large investment is required? If established companies cannot integrate vertically, the field is open for investments by people who cannot subsidize their prices to beat the competition.
- drdec 3y agoI fear that structuring the companies that way will eliminate the advantage of being vertical and so the investment would revert to not being worth it.
- Timon3 3y agoDo you maybe have concrete examples for industries with margins so small that vertical integration is the only way for viable investments?