Re:What harm do minimum wages do?
by AnthonyMouse on Wednesday August 19, 2020 @03:55PM
(#24215457)
> If the other company can also do the same, why would they piss into their own cereal by reducing their profit?
Because that's how newcomers gain market share.
> And if the other company is a newcomer looking to gain market share by undercutting, they'll likely find themselves strongarmed or bought out of the market.
But then the high margins are still there, so the dynamic that attracts new entrants is still there.
The markets that maintain high margins are the ones with barriers to entry. Which, of course, we try to avoid as a matter of policy, so any policy that relies on their existence is quite problematic.
Because that's how newcomers gain market share.
> And if the other company is a newcomer looking to gain market share by undercutting, they'll likely find themselves strongarmed or bought out of the market.
But then the high margins are still there, so the dynamic that attracts new entrants is still there.
The markets that maintain high margins are the ones with barriers to entry. Which, of course, we try to avoid as a matter of policy, so any policy that relies on their existence is quite problematic.