The Root of Market Corruption
Created on 2020-10-08T20:26:33+00:00
You can explain the root of market corruption/collusion with simple game theory:
- Assume there are two companies selling Skub.
- Both companies have a perfect 50/50 percent split of marketshare.
- Assume if you were to enter the market, you would get a full share.
Do not enter the market
- If you do not enter the market, the Skub sellers retain 50/50 and you retain 0.
Enter the market
- If you do enter the market, the Skub sellsers get 1/3rd, 1/3rd, and you get 1/3rd.
So, should you enter the market? Yes <(^_^<).
Should you ever leave the market as long as its profitable? No <(^_^<).
Defense
How do you protect your 1/rd income from someone else who can come in and get another share?
You raise the cost of entry as much as you can.
- Prevent the cost decreasing, by ensuring any specialist equipment required does not go down in price.
- Increase the cost, by getting the government to adopt regulations.