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Aside from that, prices can only dip for so long because investments were made assuming a specific price. Too much production means that prices go down and the
by vlovich123 2y ago
Aside from that, prices can only dip for so long because investments were made assuming a specific price. Too much production means that prices go down and the investment becomes unprofitable which is only sustainable for so long - producers will either go out of business or cut back on production to lower their burn rate (at which point prices will go back up). Basic supply/demand curves tend to ignore the impact of pricing on investment. Larger suppliers might keep prices lower to try to acquire more market share but even they don’t have unbounded ability to run a loss forever and more importantly they’ll have a limited amount of capacity anyway which will cause prices to go back up anyway as the rest of the market cuts production.