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Why are folks so anti-capitalist?
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Why would 3rd party #2 even try if they just saw 3rd party #1 just get stomped in that way? Why would you start a business, a very expensive endeavour (monetarily, mentally, and temporally), if you knew how and why it would get driven out of business pretty quickly? In the scenario you describe, the pressure is for prices to be higher on average, with dips here and there.