Demand gap

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A demand gap ( english demand gap ) is, in the economy , if on a market , the demand is less than the offer . The opposite is the supply gap .

General

Functioning markets tend to balance supply and demand at the market price or equilibrium price ; there is market equilibrium . In contrast, demand gaps are an indication of market imbalances. Then the market price is above the equilibrium price, so that a demand gap arises. The amount requested is smaller than the amount offered. The demand gap always originates from the demanders, who can not (or can not ) adapt their needs to the long-term supply development , or only slowly . From the perspective of the provider, there is excess capacity .

Causes and consequences

If the incomes of poorer sections of the population are insufficient to satisfy their basic needs through demand, a demand gap will develop on the consumer goods market . Other causes of a demand gap are, for example, a consumer boycott , increasing unemployment or increased savings . Even a low or no propensity to invest on the part of companies can result in a demand gap for a given loan interest , because the excess supply on the credit market is followed by a resulting demand gap on the capital goods market . According to John Maynard Keynes , the interest rate level must be lowered in order to improve the propensity to invest and thereby also to increase employment (“under-consumption unemployment ”). To put it simply, Keynesianism means that, for structural reasons, there is always a demand gap in the market economy system that is responsible for unemployment. Conversely, there is also a demand gap if there is a decline in demand without the supply situation having changed (for example, if the fashion trend has changed ). Gaps in demand tend towards deflation . In the case of a perfect market , the supply and demand curves shift in the event of a demand gap until a market equilibrium is reached, usually with a lower price and a higher quantity.

Demarcation

In terms of model theory, the demand gap and supply surplus are the same, but the difference between the two lies in the cause of the difference and in the effects on price and quantity changes. The cause of the demand gap is to be found in the demand, the supply remains constant. While the demand gap shows a decline in price and volume, the excess supply is characterized by a price increase and a decrease in volume. A demand gap is always due to a lack of activity on the part of the customer, while the supply initially remains the same.

Web links

Individual evidence

  1. ^ Gerhard Diepen, Wirtschaftslehre für den Bankkaufmann , 1985, p. 86
  2. ↑ Lothar Wildmann, Introduction to Economics, Microeconomics and Competition Policy , Volume 1, 2007, pp. 55 f.
  3. ^ John Maynard Keynes, General Theory of Employment, Interest, and Money , 1936, p. 210
  4. ↑ Fritz Reinhardt / Ralf Wittrich, The elimination of unemployment in the Third Reich: the emergency program 1933/34 , 2006, p. 81
  5. ↑ Lothar Wildmann, Introduction to Economics, Microeconomics and Competition Policy , Volume I, 2007, p. 55