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I don't understand how prices in a vastly under-supplied free market will not rise until they reach the maximum price buyers are willing to pay.

• YokoZar 13y ago
  "Willingness to pay" is different from "ability to pay" -- your willingness to pay will be greatly affected by the price of competitors or neighboring markets, for example.
  • twic 13y ago
    What competitors? What neighbouring markets?
    • YokoZar 13y ago
      Right, if there's no competitors or neighbouring markets, then you have a monopoly situation, and the sole seller (or cartel) are free to set prices as high as people are able to pay. But just because there is a shortage doesn't mean there's a monopoly.