Comment by hvb2
10 hours ago
Sure, but those same free markets will happily see those expensive producers go out of business. In the electricity scenario, that would mean blackouts.
If you triple the price, you don't have a new gas plant appear out of thin air. And the result won't really be lower consumption either, because most people would have fixed rate contracts (not in the UK so don't know specifically, but this is very common elsewhere)
> Sure, but those same free markets will happily see those expensive producers go out of business.
No, because remember you are only able to meet 10% of market demand. The expensive producers will still get 90% of the business, and the market price for their product will remain basically the same. This is what we observe in the electricity markets today: the price to us is the cost of the most expensive product. The cheaper producers who cannot meet the full market demand still get to sell at the cost of the most expensive product.