Yesterday I attended a meeting where an issue discussed related to a scarce thing that had a huge demand and the question was how to handle the high demand and here we had a case of supply being necessarily very limited.
Someone suggested that we make the customers pay Rs 500 ($10) per month for the 1st usage, maybe Rs 750 ($15) for the 2nd usage and so on with the price increasing for more usage.
Now the issue here is: for the kind of customers that we were talking sums like Rs 500, Rs 750 are quite small and are not deterrent enough to reduce consumption.
So we had the age old issue of pricing in a market where demand is much higher than the supply.
Even after all this hype and furore over the 2G scam we still seem to not have learnt how to maximize revenue and/or restrict demand in such a market.
A suggestion to auction brought ripples of laughter in the audience. They thought it was a rather impractical idea. The surprising thing about the audience was that most of them were educated people in their 60's.
I wonder whether the idea of auction was silly in that context.
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