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    market manipulation

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    How can suppliers manipulate markets to generate profits? What would be a good example of this?

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    One way suppliers can do this is to manipulate the supply side. Energy companies have on occasion "withheld supplies" in order to force up prices, which is the "market manipulation" of which they speak, and is usually the focus of government investigations.

    Assume that I'm selling water and decided to cut back water supplies from my sources and was able to do so. With less water available, individuals would then apply the water to higher-valued uses, which would mean they would be willing to pay more for the available marginal units of water than before. I most likely would see an increase in my profits, at least temporarily. Furthermore, my action would result in conservation of a scarce resource, water. At the same time, however, my actions most likely would spur others to get ...

    Solution Summary

    An example of market manipulation is given.