For consumers:
1. Because consumers early expected merchants will carry out activities such as "price cuts and discounts", in the case of the total income remains unchanged, in the base period there will be some consumption inhibition behavior (that is, savings), for future consumption. This is a special short-term life-cycle consumption theory. These base period savings are then used to increase demand around this holiday season. Curve Demand shifts right.
2. Consumer behavior is also influenced by the environment, and there are many irrational factors in consumer psychology, such as herd, impulse, and show-off mentality, which is better known as the Duesenberg Demonstration Effect. These factors can distort preferences for a particular or certain goods market, increase demand and cause oversupply. Examples include greater demand for holiday entertainment such as movies, hotels, parties, etc., for example, excess demand for iphone products, for example, greater demand for clothing products by women. These factors are often amplified and re-amplified. curve Demand right shift.
3. The demand curve curve Curve Demand is usually linear down to the right. However, in the short term, it is different and may go up.
For the supply side:
1, for a perfectly competitive market, SMC=SAC=SMR, short-run marginal cost is equal to short-run average cost is equal to marginal revenue to maximize profit, determine the price and output. But basically the commodity market product differences are relatively large, many manufacturers in a particular market to get close to monopoly position, short-term monopolistic competition market, manufacturers equilibrium principle is SMC = MR (textbooks say that at this time this equilibrium point of the average cost is not the lowest, that is, has not yet entered the scale of diseconomies of scale, for the whole market is not the most efficient, and there is still Pareto to improve the space). The short-run marginal cost equals the average revenue (which at this point may be profitable, may be a loss, or may be unprofitable), thus maximizing profit (AR-AC) Q. Starvation marketing seems to employ this same rationale - maximizing monopoly profit by controlling supply. However, supply does not change much in the short term, and supply in the very short term of a day or two is also achieved mainly by regulating inventory, so this is not a very big impact.
2. The price strategy of these manufacturers is usually price discrimination, such as "50% off for the first 100" or similar pricing strategies for different consumers. This is to gain more monopoly profits.
Combined, the market demand for many products shifted to the right, the supply also shifted to the right (just in time to eliminate the inventory), the total PQ increased (according to the elasticity analysis: elasticity of demand is larger, the elasticity of supply is smaller), in general, it is a win-win situation, the consumer's subjective satisfaction and objective needs to be satisfied, the producer's profits are improved, while the government tax revenues can be improved.