Artificial Scarcity
Say you have a business where different customers have different needs e.g. a group of people who want their mail delivered by the next day, and another bunch who aren't that fussed as long as it gets there eventually. Also, because of the indifference of the latter group they're not prepared to pay that much.

If you make a standard next day service the only option, a lot of the second group of people might stop using the postal service. But if you offer them the same service at a reduced price then you have to do the same for the first group too.

By artificially hindering their service they get to have two different prices to attract different customers and, in theory, make more money.

Read "The Undercover Economist" by Tim Harford. It's worth it for the chapter on Cameroon alone.
( djtrialprice, Fri 4 Jul 2008, 14:42, Reply)