When the channel is constrained

Guest Post: If The Market Crashes, Who Owns Enough Stock To Even Care?

In channel theory we say that stocks move in larger amounts, less often. This is so because the stock market is composed of CEOs who look at costs and try to maximize mutual entropy with commodity constraints. CEOs want to make their market (in totality as a network based channel) overlap the channel network for the most constrained input. This is maximizing economies of scale. In Shannon it is removing as much redundancy in production as possible, otherwise known as maximizing disorder in the set of -iLog(i) (getting them all within an integer). So if you look down a channel, say the production of applesauce, you will see the purchase of an apple farm be just as surprising as the discovery of a can of applesauce in a household cupboard.

We are constrained, supply lines will be shortened. CEOs look for economies of scale. Another name is optimal transport.