What stops a rich man from destroying an entire industry?

Business Money
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I don’t know that much about capitalism, so here goes.

Let’s say here’s a billionaire, who is insanely profitable. Let’s say he wants to just drive an entire industry out of business, so he just opens up shop in that industry, and basically undercuts everyone by selling their product/services at such a ridiculously low price that no one in that industry can compete at all. The billionaire doesn’t care he’s losing money, he’s got money to burn. He does it long enough to essentially drive everyone in that business out of business.

What stops him from doing that? Will the government step in?

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Amazon?

4 Likes
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There are competition laws depending on the jurisdiction he is in. Some stricter than others. Australia for example has the ACCC which has a lot of tools at their disposal to prevent this while other poorer countries such as African ones don’t… but at the end of the day… if it is serious enough the government will turn on him/her (no matter what the bribe)

Also… why would any billionaire with cash to burn (a vast majority actually don’t have that kind of cash to burn) bother with doing this?

Generally though… it is impossible to keep it up as the billionaire will run out of cash reserves for sure and even if does corner the market… it doesn’t mean that competitors will not keep springing up. That’s the beauty of capitalism.

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I wouldn’t know. But perhaps the billionaire’s other business is enough to prop up an unprofitable business, and it doesn’t seem particularly far fetched that he’d use that as a means to take over another market. As to why, well why do imperialist countries take over another country?

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Quite frankly. If a billionaire does corner a market for a good and the prices come down because he/she is subsidizing it. Then I would be happy to buy it.

When he jacks the price up. I will be happy to go to one of the subsequently new competitors with a normal price. (Provided the quality is acceptable) That’s how capitalism works.

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Same way Walmart took over an entire market too. Plus if they do it long enough, they’ll be able to be sustainable due to economy of scale, in such a way that no new competitor could spring up because they’d never be able to match the scale at all.

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And Uber.
Basically substitute rich man for a bunch of rich stockholders including venture funds backed my some super rich individuals.

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In the US there are predatory pricing regulations. I don’t know much about them but here is a link:

Antitrust Division | Competition And Monopoly: Single-Firm Conduct Under Section 2 Of The Sherman Act : Chapter 4.

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Yeah, basically this thread is just a description of their business model^^ ok? and now?

1 Like
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Maybe answer is: nothing^^

1 Like
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Trump accused China of undercutting American steel. It takes a lot of money to run a steel mill and if you shut it down it stays shut down. China was happy to grow their industry and have cheap steel for their ghost cities. They called it a security threat because if we lost our ability to make steel we would be vulnerable.

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If it is from abroad and is below manufacturing cost, the industry being impacted could request its country to investigate through anti-dumping and/or anti-subsidy investigations (if both parties are part of the WTO). After such investigation, which must follow WTO rules, the country being damaged can launch retaliatory tariffs that level the playing field.

In Taiwan, President Tsai knows these rules often better than her bureaucrats as its what she did her PhD in, as well as getting Taiwan in the WTO.

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So if it doesn’t involve imports, but just service, for example someone opens up a hair salon at unbelievable prices.

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Then you are shit out of luck, me thinks.

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There are anti-monopoly laws.

In practice this also likely still works in very small industries. Obviously, a multi-billionaire could start producing cactus and destroy all the competition.

In infrastructure, IT, military, commodities, this is probably not possible due to many rules and regulations. But a very tiny niche market that has no political clout: ok. Elon Musk could corner the global puzzle market and dominate it (maybe). Why though?

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I go to a a hair salon in Chiayi. Been doing so for over 20 years. A hair wash and hair cut, a shave with a nice blade, and neck massage and having my ears cleaned NT$300. Takes around 90 minutes.

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Let’s say if foxconn decides to offer all this for 150?

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Let them try. They wont be able to compete with a small business owner in her own place.

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Don’t give them any ideas. I bet terry guo would relish destroying mom and pop businesses. Opening like 50 stores across Taiwan just to drive mom and pops out is nothing for him.