The Root of Market Corruption

Created: 2020-10-08T20:26:33+00:00

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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.