Eli5: Why is it that in most industries the companies that are located further down its value chain make more money? (Think of the value chain as for example raw materials suppliers, manufacturers and sellers)
In: Economics
Skilled labour and processing add the $$ its relatively easy to employ / create e.g. a mine … but to turn the raw material say silicone into computer chips for example you will have skilled designers, patents, engineers, legal teams etc etc so the charge for the end product is much more. Every layer of the supply chain adds on their own cut.
The seller takes the biggest risk. As you go up the chain there is less and less risk.
Logger knows he will always be able to sell the wood to almost anyone.
The final seller must find a buyer for that sculpted chair with a giraffes legs. Very risky.
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