| > Medical costs started angling up steeply in the 1960s with the advent of heavy regulation Broadly, to a first approximation: Medical costs, real-estate, and education have increased in price to capture the consumer surplus created by the decline in food. clothing, and fuel costs. > Isn't dumping competing on price? Nope, dumping is used to drive new entrants out of a market. It also acts as a signal to prevent new market entrants. If I sell 2 million widgets per year at a price of $10 over a cost of $1, after $4 million in capital costs, I can maintain a monopoly if I'm willing to drop my sale price to 50 cents every time someone enters my market, and I raise the price when they exit it. This creates a Nash Equilibrium were no rational actor will spend $4 million to build a factory to compete with me. |
It is quite a remarkable coincidence that medical costs angled steeply upward immediately after heavy regulation and government involvement in it began.
> I can maintain a monopoly
It'll be pretty hard to swallow $1 million/year in losses to do so. You'd have to maintain those losses to beat back even a small competitor, who would have proportionally smaller losses. A small competitor would have the capability to ruin your business with a small investment on their part. I bet they could finance it by shorting your stock.