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Capitalism always takes over, if there is potential to sell someone will step in. Used to have small car shops and stores all around, big companies came in and they all closed shop, it'll go back to that most likely, although it's more likely other competitors will take advantage of the situation and just move in instead. Especially if the situation expands to further states.
I’d hope the free market will move in and create competition. I am pessimistic though. I think anyone who tries will be shut down by buyouts/suppression.
Yeah, imagine a small rural town trying to start their own car factory today.
"Oh, it's going to cost $100 Million? Well shit..."
Economies of scale are a bitch.
The magic hand of the free market is an illusion created by capitalists trying to fool consumers into thinking they have the power of choice. Someone will only step in to fill in a void if it's economically viable. Too many people depend on cars, in the US, to just... not buy them. And preparing to fill that void takes a metric fuck ton of capital and time to set up. In the mean time people need vehicles to get around. Not to mention commercial fleets, delivery vehicles and rentals.
Your example makes the opposite of your point. How are small companies supposed to compete against the economy of scale? This is especially true in things that require a lot of manufacturing. There's an insane amount of upfront capital necessary to even be able to come close to competing.