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In Economics, there are numerous rules, the most famous being Supply and Demand. But it seems there is one that "If you can't protect your market, you'll never make any money." Industrial sales is often divided into territories, and salesmen can make a good Irving. Multilevel marketing has unlimited territory and members are encouraged to recruit competitors; the result few even make minimum wage. Taxi drivers in the 60's could make decent money as the number of cabs was limited and required inspection, drivers needed background check. Now Ãœber drivers complain they can't make enough. Many other examples. What law covers this?
In Economics, there are numerous rules, the most famous being Supply and Demand. But it seems there is one that "If you can't protect your market, you'll never make any money." Industrial sales is often divided into territories, and salesmen can make a good Irving. Multilevel marketing has unlimited territory and members are encouraged to recruit competitors; the result few even make minimum wage. Taxi drivers in the 60's could make decent money as the number of cabs was limited and required inspection, drivers needed background check. Now Ãœber drivers complain they can't make enough. Many other examples. What law covers this?
All of these examples boil down to supply and demand.
Artificially protecting a market prevents the law of supply and demand from balancing economic activity based on price.
If a salesperson cannot make enough money, they'll move on to something else. Likewise the multilevel marketing folks and Uber drivers.
In my opinion, market protection is why drug dealers kill one another. Market protection also enables unions to demand higher wages for their members. Neither of these activities have a basic economic rule.
It's not a law of economics that I am aware of, but you are sort of describing a ”perfectly competitive market.” In this scenario, prices are driven down, no one player can exert price control, and price equals marginal cost. To maximize profits, these should also equal marginal revenue.
Google ”perfect competition” and ”economics” and you will find lots to read.
In Economics, there are numerous rules, the most famous being Supply and Demand.
But it seems there is one that "If you can't protect your market, you'll never make any money."
What law covers this?
In my opinion, market protection is why drug dealers kill one another. Market protection also enables unions to demand higher wages for their members. Neither of these activities have a basic economic rule.
Correction: both those activities have artificial constraints that inhibit them from allowing their respective markets to reach Supply/Demand equilibrium.
If Freakonomics(1) is to be believed, drug dealers live with thier mothers, too, due to low wages. Profits are highly dispersed and not commensurate with level of risk involved. Seems to make sense. That may map to multi-level marketing, in a (very) broad sense. The territories (markets) are held together by physical force, not unlike the former Soviet Union, which in that case does maintain profitability much further up the value chain.
Unions gather all the guild workers in a trade into what amounts to a cabal, league, or confederacy. Call it what you will. If all members of a specific trade are in the cabal, due to force or threat of force (economic or physical), the entire market of those skills is effectively cornered. Those outside cannot work, again under threat of violence or economic hardship. With a cornered market, one group controls the supply and can dictate terms favorable to themselves to the demand-side. That is clearly an artificial constraint, I'll not argue its merits in the 21st Century but it does lead to inflated wages/benefits and cost of goods, compared to those OUTSIDE the bubble/cabal who produce similar goods or services under no such constraints.
That price-conscious consumers will always, again absent any artificial constructions, go to that which is both lowest price and highest quality became axiomatic in the 1980s when automotive markets opened. Witness the very shaky ground the Big 3 automakers went through during that decade: turning out subpar product and charging more for it, then introducing 'tariffs' (again, an artificial market constraint) when overseas products became more popular for the reasons specified (quality, price).
(1) Levitt, Steven D., and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: William Morrow, 2005.
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