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 or group assumes for a particular purpose, which differs from their original or true name ( orthonym). This also differs from a new name that entirely or legally replaces an individu ...

, as with the Kenyatta series by

Donald Goines Donald Goines (pseudonym: Al C. Clark; December 15, 1936 – October 21, 1974) was an African-American writer of urban fiction. His novels were deeply influenced by the work of Iceberg Slim. Early life and family Goines was born in Detroit, Mich ...

, 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 of horror, supernatural fiction, suspense, crime, science-fiction, and fantasy novels. Described as the "King of Horror", a play on his surname and a reference to his high s ...

, who published several books under the pseudonym

Richard Bachman Richard Bachman is a pen name (as well as fictional character) of American horror fiction author Stephen King. King portrays Bachman in the third season of the FX television series '' Sons of Anarchy''. Origin At the beginning of King's car ...

. 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 trader A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing ...

s Sam Siegel and Vincent Kosuga bought up large quantities of

onion An onion (''Allium cepa'' L., from Latin ''cepa'' meaning "onion"), 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 on ...

s and then flooded the market as part of a scheme to make money on a short position in onion

futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded * ''Futures'' (magazine), an American finance magazine Music * ''Futures'' (album), a ...

. 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, cornered the onion futures market on th ...

. The

video game crash of 1983 The video game crash of 1983 (known as the Atari shock in Japan) was a large-scale recession in the video game industry that occurred from 1983 to 1985, primarily in the United States. The crash was attributed to several factors, including ma ...

was largely caused by excess inventory of low-quality games. Atari, Inc. greatly overproduced the game ''

E.T. ''E.T. the Extra-Terrestrial'' (or simply ''E.T.'') is a 1982 American science fiction film produced and directed by Steven Spielberg and written by Melissa Mathison. It tells the story of Elliott, a boy who befriends an extraterrestrial, dub ...

'' and could not sell them, and disposed of the inventory in a landfill.

References

Business terms Pricing {{business-stub

Examples

See also

References