This isn't exactly a supply and demand situation that might cause prices to increase by restricting supply, like what you sometimes see with global commodity cartels such as oil.
What's happening in this case is that they are overproducing because profit margins are high enough that they can overproduce and still be happy with the profit after discarding the extra, in the hope of capturing the stochastic upside of extra sales from never being out of stock.
This might cause various random fast fashion junk items to occasionally go out of stock when they wouldn't have in the past, but it's not like you're going to see long waiting lists or high aftermarket prices. People just won't buy that stuff because there will be lots of alternatives, are they just won't buy anything at all and realize they don't need it.
So yes, in an abstract textbook sense, the price might go up in the sense that you might experience some probability of your desired items selling out when that probability was lowered before. But I don't think anybody in their right mind would argue that's a serious economic detriment.
Maybe there's a case to be made that this is a crude way to address what is essentially an allocation failure. But that alone doesn't mean that we shouldn't try it or that it's bad policy.
Economically, producing less to start with is not very different from what is currently done, destroying excess inventory. Therefore I don't think it's at all a given that prices will go up.
The only error in the whole post. I think it's more productive to ignore that and focus on the important stuff... which is about why this kind of market interference isn't going to work out the way a naive optimist would hope.
This isn't exactly a supply and demand situation that might cause prices to increase by restricting supply, like what you sometimes see with global commodity cartels such as oil.
What's happening in this case is that they are overproducing because profit margins are high enough that they can overproduce and still be happy with the profit after discarding the extra, in the hope of capturing the stochastic upside of extra sales from never being out of stock.
This might cause various random fast fashion junk items to occasionally go out of stock when they wouldn't have in the past, but it's not like you're going to see long waiting lists or high aftermarket prices. People just won't buy that stuff because there will be lots of alternatives, are they just won't buy anything at all and realize they don't need it.
So yes, in an abstract textbook sense, the price might go up in the sense that you might experience some probability of your desired items selling out when that probability was lowered before. But I don't think anybody in their right mind would argue that's a serious economic detriment.
Maybe there's a case to be made that this is a crude way to address what is essentially an allocation failure. But that alone doesn't mean that we shouldn't try it or that it's bad policy.
Economically, producing less to start with is not very different from what is currently done, destroying excess inventory. Therefore I don't think it's at all a given that prices will go up.
Destroying the inventory has a cost though.
The only error in the whole post. I think it's more productive to ignore that and focus on the important stuff... which is about why this kind of market interference isn't going to work out the way a naive optimist would hope.
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