Markups

Really interesting comment about market power, regulation and legacy product lines:

Take a US manufacturer of a specific product, a series of manufacturers. An established market, one that is growing a bit faster than the economy. Lots of manufactured products, some large some small, all with at least three major players who compete for business. Over time the whole industry gets bought up by three major corporations, and this industry is a small part of their whole. The manufacturing plants get moved offshore, and the local operations are sales and engineering. Product lines are dropped. Instead of a broad range of products that cover the wide market requirements, it becomes a narrow offering, market segments are simply abandoned. Costs go way down, dramatically so for the products they sell, but markups increase. The old hands who know the industry are gotten rid of. Regulation is their friend; the barriers to entry are insurmountable, natural monopolies are created by limiting choice in the market by any means.

So capital goes down; who needs it. Labor goes down, it is elsewhere. Markup goes up, markup being percentage of the sale above cost.

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