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FRAMEWORKPaper #66
The Substitution Trap Law
Proves that banning one Hollow Win domain without addressing demand shifts welfare destruction to substitute domains. Prohibition of alcohol shifted welfare costs to illicit markets.
THEOREM TYPE
Framework
physically/biologically binding
SOURCE STATUS
Summary + deck generated
verified by paper record
OPEN HTML DECK ↗Deck mode is an on-site reading view, not a PowerPoint download.
Theorem status: evidence-traced claim under the cited paper's assumptionsFalsification: show the same game preserving system welfare without changing the payoff structure
KEY FINDINGS
THE SUBSTITUTION TRAP LAW
Let A = {products performing function F}. Product regulation targeting a ∈ A leaves the substitution set A' = A\{a} non-empty. The market equilibrium shifts to a' ∈ A' with potency p(a') ≥ p(a). Functional regulation targeting F makes A' = ∅ by construction.
PLAIN ENGLISH
Ban the molecule and the industry produces a different molecule that does the same thing, often more dangerously. Ban the function and there is nowhere to substitute to. OxyContin to fentanyl is a regulatory design failure, not a market failure — targeting the wrong level of abstraction.
EVIDENCE & LIMITATIONS
- Theorem status: evidence-traced claim under the cited paper's assumptions
- Falsification: show the same game preserving system welfare without changing the payoff structure
REFERENCES / CITATION STATUS
Reference counts for this manuscript have not been published yet. Treat its citations as unverified until a source list is available.
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SOURCE QUESTIONS
SSRN not yet postedDeck ↗
WHY THIS MATTERS
For the economist
A structural claim about when bilateral optimization degrades the shared system. Read the formal statement and its stated axioms.
For the regulator
The constraint is physical or biological, so disclosure alone will not internalize it. The policy lever is to bound exposure, not to price it away.
For the executive
This is where a privately efficient decision can degrade the system the business depends on. The governance question is which decision records would make that system cost visible before it is normalized.
For the teacher
An on-site HTML deck and the expanded curriculum cover the argument, the evidence, and the measurement. Use the deck as a self-contained class session, then route deeper through the 45-50h core course or 100+h full curriculum.
For the affected community
In plain terms: who gains from the current arrangement, who pays for it, and what rule change would alter that split. The summary states each without jargon.
© 2026 Erik Postnieks · Independent Researcher · Salt Lake City