An economist would say profits go to zero if markets are really free. Like if there were no barriers to entry and consumers chose purely on price firms would keep entering and would always be incentivized to lower prices to get the sale.
There are barriers that are natural, like "I already have a relationship with vendor A", or "I really enjoy brand B", "I'll have to invest a lot of money to start this business and I won't do it if it seems unlikely I'll make a profit", etc. Then there are barriers like "we have a patent on this technology", "we own a copyright on this movie", "we control the distribution channels", "we pass laws to get keep out competitors."
Business is all about finding ways to beat the economic constraints and ensure you get a profit!
The best case you can make for our system, in my mind, is that there is competition so that vendors have an incentive to provide good products and services at fair prices. Sure, there has to be enough profit to attract investment, but our system works better for all of us when regulation encourages competition.
alt Hacker News
I'd put it this way.
An economist would say profits go to zero if markets are really free. Like if there were no barriers to entry and consumers chose purely on price firms would keep entering and would always be incentivized to lower prices to get the sale.
There are barriers that are natural, like "I already have a relationship with vendor A", or "I really enjoy brand B", "I'll have to invest a lot of money to start this business and I won't do it if it seems unlikely I'll make a profit", etc. Then there are barriers like "we have a patent on this technology", "we own a copyright on this movie", "we control the distribution channels", "we pass laws to get keep out competitors."
Business is all about finding ways to beat the economic constraints and ensure you get a profit!
The best case you can make for our system, in my mind, is that there is competition so that vendors have an incentive to provide good products and services at fair prices. Sure, there has to be enough profit to attract investment, but our system works better for all of us when regulation encourages competition.