Bob Dylan, Columbia Records, And The Abuse Of The Scarcity Principle

Yes, you can ruin a sound economic principle by taking it too far.

One of the basic underpinnings of Economics 101 is this: the creation/illusion of scarcity is good for the provider because it (artificially) stimulates demand, giving the owner of the good the option to make a tidy profit either due to increased volume and/or the ability to raise prices.

A company that demonstrates a sound understanding of this economic principle is McDonalds Corp. They regularly roll out the Monopoly challenge for “a limited time only”, increasing demand among fast food customers weighing their options about where to eat by convincing them to go to McDonalds because those Monopoly pieces will only be around for a couple weeks (if the promotion ran year-round, the novelty would wear off to the point where it provided the company no additional edge).

McDonalds also does this with the McRib. They only roll … Read the rest of this article!