The Motley Fool Discussion Boards
Investing/Strategies / Mechanical Investing
|Subject: Re: OT: Wealth||Date: 3/7/2013 1:09 AM|
|Author: Radish||Number: 242131 of 258196|
Let's suppose farmers in one area of the country are dependent on one distributor who has obtained control of the only road to the ultimate market. That distributor could extract a share of the product value which is disproportionate to the costs of distribution (including compensation for cost of capital and typical risks).
In theory, perhaps. In real life there's a limit to the possible "disproportionate"-ness, unless a government grants a monopoly in some form. In your example, most likely someone seeing how much profit the distributor is making would build a new road, or a canal, or a rail line. Or perhaps the farmers would move, or switch to a crop that distributor doesn't handle well.
If our economic system allows or encourages the development of such concentrations, artificially locking out competition, we all suffer.
Concentrations in free-enterprise systems may limit competition to a degree, but I doubt they will ever lock it out. And we suffer far worse under the laws and regulations intended to "solve" this problem than from the problem, to the limited extent it can actually occur in real life, itself.
When the concentration of wealth and/or income starts to artificially limit genuine competition by cornering resources (including the creation of laws and