Showing posts with label Supplier-induced demand. Show all posts
Showing posts with label Supplier-induced demand. Show all posts

Wednesday, February 17

Supplier-induced demand in Quebec City

I was in Quebec City over the weekend for a reading break vacation with my girlfriend and noticed an interesting phenomenon. I'm not sure if this is common in other cities, but in Quebec City there are women who walk from table to table in restaurants trying to sell flowers to diners. This is a perfect real-world example of supplier-induced demand.

In economics, we generally think of demand as being generated by consumers. People demand products because the good can help them fulfill a want or desire. Supplier-induced demand is the opposite — it occurs when the producer causes us to desire their product. It often comes up in health care, since we often only decide to "consume" different medical services at the advice of our doctor; if our doctor doesn't recommend the procedure, we don't have any demand for it.