I am not an expert economist but I do think suggesting Google simply pay $200k for exploits would fix things is far too simple a solution. It would simply make the exploits even more desirable, and push the rewards of selling on the black market even more lucrative.
Exploits are already desirable. Google paying a respectable sum for them won't make them less desirable.
An exploit for a widely used application, especially a client-side application with a good reputation like Chrome is extremely valuable to someone wanting to create a botnet etc. There's no way to avoid bugs in software, but rewarding security researchers can help mitigate the risk. And security is all about mitigating risk in a cost effective manner.
If Google started paying $200k to match the spot price on the exploit market, the market would react by pushing the price up. Soon Google would be paying $300k, then $400k.
But at some point, that price appreciation has to stop, because there will stop being counterparties who will see $500k or $700k as a rational price to pay for an exploit.
When that happens, one of the legs of the vulnerability market will get knocked out; the market will have discovered some approximation of the true value of an exploitable security vulnerability (again: that value is based on immoral behavior, but reality doesn't care about that). Google will pay it, because it can, because the final price of exploitable vulnerabilities is certainly a tiny tiny fraction of their total overhead, and because Google has an advantaged long-term position that will enable it to control the supply of exploits and eventually bring its costs back down.
