Suppliers going bust is evidence that markets are working

This is not, to put it mildly, the conventional view yet it is true all the same. If the cheap end of a market features firms continually going bust then that’s a sign that the market is working:

Households risk being cut off from the internet as runaway inflation threatens to cause a wave of bankruptcies among broadband networks.

Ofcom is drawing up contingency plans with BT which could take on thousands of customers if a number of the smaller suppliers, so-called 'alt-nets', begin to fail.

More than 150 BT challengers backed with billions of pounds of private investment have entered the market to try and capitalise on the upgrade to ultrafast speeds.

Private equity, pension funds and sovereign wealth have been pouring money into broadband start-ups in the hope of securing steady, long-term returns from the shift to speedier connectivity.

However, concerns are mounting that the fierce levels of competition will begin pushing some firms to the brink, as they struggle to compete with the might of BT's Openreach and Virgin Media O2.

Our aim in having a market at all is that those folk can indeed try their new ideas about how to do things. Most of them will fail - most new companies do - but out of that wreckage comes those few new ways of doing things better, more efficiently, more inline with consumer desires. It being those few that are the mark of the advance of society in doing things better, more efficiently, more inline with consumer desires.

That people are constantly testing that low end of the market with new ideas is evidence that there is free entry into that marketplace. That most of these news ideas fail is evidence that the current market players are relatively efficient and inline with consumer desires.

That there are no $100 bills on the sidewalk is evidence that $100 bills get picked up. That new competitors can’t gain a foothold in a market is evidence that the current market structure doesn’t leave room - there is no fat to be cut - for new competitors.

That there are continued new attempts to enter a specific marketplace and also that most of those attempts fail is evidence that markets are working.