Imagine there are 100 manufacturers of cars, who discover that a byproduct (lets call it weberfoam) of the process of making cars is useful in making planes. Each manufacturer makes between 1 and 2 tonnes of weberfoam, of varying quality per month.
10 plane manufacturers want weberfoam, because it makes planes lighter. They’re willing to pay quite a bit for it (up to $1,000 a tonne) but at that price will want only 1 tonne each. At $1 a tonne they’ll buy 2 tonnes each.
What should the car manufacturers do? Would them getting together and agreeing a minimum price they’ll sell weberfoam for be in there interests?
Of course, putting it that way makes me realise the harmful effects more clearly. Cheers :-)
Imagine there are 100 manufacturers of cars, who discover that a byproduct (lets call it weberfoam) of the process of making cars is useful in making planes. Each manufacturer makes between 1 and 2 tonnes of weberfoam, of varying quality per month. 10 plane manufacturers want weberfoam, because it makes planes lighter. They’re willing to pay quite a bit for it (up to $1,000 a tonne) but at that price will want only 1 tonne each. At $1 a tonne they’ll buy 2 tonnes each.
What should the car manufacturers do? Would them getting together and agreeing a minimum price they’ll sell weberfoam for be in there interests?
Of course, putting it that way makes me realise the harmful effects more clearly. Cheers :-)