Capturing Triangular Deadlock Dilemma as an Eternal Arbitrage Generator

Real estate, manufacturing, and retail constitute the three foundational markets, together accounting for 40% of global employment. Real estate owners offer space through construction agents; manufacturers transform raw materials acquired via resource agents into products; and retailers serve as agents of consumers. These three core market players are inextricably linked and are perpetually trapped in a classic Prisoner’s Dilemma.

Real estate aims to rent at the highest possible price; manufacturers attempt to lease lands as cheaply as possible; manufacturers seek to sell products to retailers at the highest margin; and retailers want to purchase from manufacturers at the lowest cost. Consumer loves low price everyday. Retailers act as agents representing consumers’ interest in buying at lower prices.

These three-party opposing interests create a three-way deadlock dilemma. Each participant faces the similar positioning of the traditional Prisoner’s Dilemma: even if others cooperate, defecting remains more profitable, and if others defect, defecting oneself reduces losses.

A brand, then, is an economic control structure wherein a powerful Ultimate Beneficial Owner (UBO) governs stakeholders’ conflicts of interest across the value chain—from supply to consumption—so as to prevent the emergence of Prisoner’s Dilemma. While UBO literally means “ultimate beneficial owner,” colloquially it refers to a third party who resolves the three-party deadlock and reaps significant profit. The presence of a UBO who consistently generates arbitrage opportunities from the eternal triangular structure is a prerequisite for the overall growth of the ecosystem.

By constructing a branded value chain that internalizes the conflicting structure of real estate, manufacturing, and retail—and internalizes risk—arbitrage opportunities arise on a perpetual basis.

For a startup to accumulate value sustainably, it must go beyond mere low-margin scale expansion. Instead, it needs to build an economic control structure that enables the deliberate widening of spreads and the realization of operating leverage. It is essential to establish both downside protection—safeguarding against destructive competition among players trapped in the triangular dilemma—and upside maximization, by capturing new demand opportunities. To achieve this, a vertically integrated model is required, one that internalizes risk through a spread—the so-called “margin of safety”—while combining both pricing power and buying power. This, in essence, is what is commonly referred to as a brand.