[DAnconia55]

Imagine for a minute that you have a pie. Every single year more and more people want a piece of same old thing. What results is each one having a smaller and smaller piece of the pie.

The pie isn't the same each year. The pie gets larger.

In the case of economics it is a case of over production and not enough consumption.

This creates inventories, leading to cyclical reduction in production and discounts on current stock.

[maui_hawaii]

Who says the pie gets larger? Ask the telecom industry, or the internet industry...

Even if it does grow in the general sense of the word, if the pie grows at 5% but the number of entrants grows at 10%, the pie is smaller per entrant.

This creates inventories, leading to cyclical reduction in production and discounts on current stock.

And thus it is an inefficient model.

Secondly deeper discounting is only a short term surface fix. Also, the deeper the discount the smaller the profit.