investors will get burned and be more hesitant to pour more gasoline on the fire

that defintely makes sense, but from what i hear we are in a glut of cheap capital in recent times, so this might not be so effective deterrent

  What company has had long term success with this model 

im not sure it needs to be long term sustained, as long as short term damage is severe enough, the player can just harvest the market share from the competition... when it heats back up again, just use that financial might again to clamp things down... it would be a huge deterrent to further investors/entrepreneurs