Captive supply
Encyclopedia
Captive supply is a term for that part of the supply that is not owned by a company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...

 but is used by the company to maximize its own profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...

 often at the unknowing expense of those who actually own those supplies. This is usually a characteristic of a market that is dominated by one firm or a few firms and implicit collusion between those firms. Often captive supply is called a beneficial market agreement by those controlling the supply but the actions of those controlling that supply reveal otherwise. Captive supply is used to subvert the natural forces of market price determination to accrue more economic benefits to those who control it. It circumvents the typically price-moderating market force of supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

by artificially restricting the supply.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
x
OK