We went into this a bit starting about here in this thread. The idea of “cornering a market” is largely a myth. The amount of resources it would take to do that are immense, and if you look at that thread, you’ll see how even examples that are offered of this supposedly happening are bunk.
This is basicallly the “predatory pricing” myth. For a lot of economic explanation, see here.
But in your situation, for one, just as in any other situation, as more and more of the supply gets purchased, the price rises. So the “predator” will not only have to have the resources to pay the higher prices, but he’ll have to sell them at a high enough sustained premium to recoupe all those losses. This is essentially not feasible in any realistic scenario.
Another point is, if this is such a small community with such limited farming, one would have to assume it has limited everything else. Where did this guy get all the wealth to purchase the entire stock of the commodity?
Something else to consider is, why can’t people just switch to barley? Or some other substitute good?
What’s more, again, if it’s such a small community, and they’re so worried about being gouged, why did the small number of sellers sell all their stock to the one guy? They could easily refuse. You see this all the time in retail shops. When they offer sales they regularly limit the purchase to a certain number of items per customer. This is because the sale price is obviously not enough to compensate the retailer for the sale. It’s what’s called a “loss leader”…a product used just to get people into the store in hopes that they will buy other things. Sellers don’t have to sell anyone anything.
And one last thing…by the time he would be able to sell all of it at the high price he would need to to actually earn a profit worthy of such an investment, people would have found a way to largely deal without the product…and quite probably, more supply would have been harvested. So in essence, there’s really no way for the guy to recoup his initial expenditures (again, assuming he had such wealth to begin with), so he would basically be wasting his money. Tom Woods recounts a great example of an attempt at “predatory pricing” backfiring.
And the idea of buying off the entire supply of medicine or medical supplies is just insane. What is much more likely is IP protections (in this industry, usually patents) are used to monopolize and restrict supply by having the government cover the cost of preventing competition…as in, threatening potential competitors with violence and theft.
There was a great documentary on Australian television that covered this very issue. Patently a Problem. The trailer is here, and the full film is here.
One more great argument against IP.