Free Market Price Regulation

I wrote a defense of price gouging not too long ago, and I want to update that with another aspect of free market price regulation. I demonstrate your products will never be stolen from you in any materially meaningful way when you compete on design. Another constant factor in a free market is profit margins are competitive and tend to settle to a basic common place.

Knocking off competitors' designs is easy within any industry, since all of the players can look at any item and know the cost and engineering involved. But what would be the point when you can gain the same profits off your own designs? Plus, being a knock-off is generally considered second-rate, so it is avoided.

Should you compete on design, and choose to charge more than is warranted empirically, you will be abusing your customers by charging too much. Your competition will spot this instantly.

Say a normal mark-up in an industry is 100%, and for one item in your line of 50 items, you actually price it out for a 500% markup.

Well, your competitors will spot this, and see that if they "steal" your idea, and mark it up a mere 250%, they at once protect consumers from your avarice by exposing it, plus pick up a super-premium over what they normally earn by selling an item of your instead of their own. This is the natural law sanction on overcharging your customers.

For anyone who makes the mistake of overcharging customers, this slap on the wrist normally restores the avaricious to their senses.

Now of course, with government intervention in the forms of patents or other monopolies, some biz people will raise prices, and make it look necessary by spending more than is necessary. Medicine is a perfect example of this, with massive featherbedding to jack up costs.

Usually unions get accused of featherbedding, that is demanding more workers than necessary to get a job done, driving up costs. So it is with every other field where competition is not allowed, only worse than when unions do it, because it is hard to see where the feathers are being embedded. In a free market this overpricing is not possible.

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