Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Steve Lee who wrote (15407)	2/22/2002 3:31:52 PM
From: elmatador	Read Replies (2) of 74559

Market decide? In perfect, free markets with zero barriers to entry, prices drop to marginal costs. Attempts by incumbents. To keep prices above marginal cost will be defeated by new entrants deciding that price cuts to levels even slightly above marginal cost will generate profits. As a result, industry prices inexorably fall to marginal cost. So, no one makes money, right? Add regulation and high barriers of entry and you get rid of free-markets because only economists love free markets.

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