The government closes up production on ONE manufacturing company and the formula disappears all over the country. I don’t understand. Please help me understand!!!!
Joseph Schumpeter explains it (in “Capitalism, Socialism and Democracy”). It is a classic case of “regulatory capture” (though Stigler invented the term), where the rules have been written to exclude competitors that cant comply with regulation, which gives the biggest players a near-monopoly. In this case the drug-approval level of compliance required excludes most food manufacturers. Hence the manufacturers have consolidated into a tiny number (I think just two companies own 90%+ of the market).