Flooding the market is an excess amount of inventory for sale causing an undesired drop in price for the product that can, in extreme cases, make the
price go negative or make the products impossible to sell at any price.
Businesses take measures to avoid that effect. For example, publishers will release books from popular authors under
pseudonyms
A pseudonym (; ) or alias () is a fictitious name that a person assumes for a particular purpose, which differs from their original or true meaning (orthonym). This also differs from a new name that entirely or legally replaces an individual's ow ...
, as with the
Kenyatta series by
Donald Goines, which were published under the name Al. C. Clarke. The same also occurred for
Stephen King
Stephen Edwin King (born September 21, 1947) is an American author. Dubbed the "King of Horror", he is widely known for his horror novels and has also explored other genres, among them Thriller (genre), suspense, crime fiction, crime, scienc ...
, who published several books under the pseudonym
Richard Bachman.
Flooding the market can be done intentionally in an effort to eliminate competition and is then known as
dumping.
Examples
In the United States in 1956,
commodities traders Sam Siegel and
Vincent Kosuga bought up large quantities of
onion
An onion (''Allium cepa'' , from Latin ), also known as the bulb onion or common onion, is a vegetable that is the most widely cultivated species of the genus '' Allium''. The shallot is a botanical variety of the onion which was classifie ...
s and then flooded the market as part of a scheme to make money on a
short position in onion
futures.
This sent the price of a 50-pound bag of onions down to only 10 cents, less than the value of the empty bag.
Effectively, the
price of the onions was negative.
The incident led to the passing of the
Onion Futures Act
The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, Cornering the market, cornered the onion ...
.
The
video game crash of 1983 was largely caused by excess inventory of low-quality games.
Atari, Inc. greatly overproduced the game ''
E.T.'' and could not sell them, and disposed of the inventory
in a landfill.
See also
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References
Business terms
Pricing
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