If i produce bottled water i buy water bottles and fill them with water. Why do i not buy plastic and make my own bottles? Why does it not actually save on costs from paying another company and taxes from buying/selling, and also possibly transportation?
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Because the other established bottle manufacturing company already has paid for the factory building, machinery, training, research and development, quality control etc. to produce bottles and is now offering them at a fixed price per bottle which is slightly above its own costs per bottle.
If you want to produce bottles before filling them with water, you have to replicate everything that other company has done over the years first. Which is a massive initial investment. After some time you might be able to produce bottles slightly cheaper than you could buy them from the bottle manufacturer, but by then some new law could have been introduced forcing you to change some manufacturing process or ingredient for the bottles, for which you need to do all that stuff again. So you’d need to constantly react to the volatile market environment for bottles, instead of focusing on your actual product: Bottled water. Which we haven’t even started producing until now – for that you’d also need factories, machinery, training, etc.
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