[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.

[maui_hawaii]

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

A correction in production, or supply stocks is exactly what I refer to. Supply and demand are not connected when that happens.