In the long run competition drives the price down to marginal cost. You sell products for more than their marginal cost by either innovating techniques to keep

In the long run competition drives the price down to marginal cost. You sell products for more than their marginal cost by either innovating techniques to keep your costs lower than your competitor's costs (Wal-Mart does a lot of this) or by providing some feature that justifies a price higher than whatever the lower-priced competitors offer. The difference between your price and the marginal cost goes to paying off the investors who subsidized that hundred-million-dollar factory.