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MENTAL MODEL · M3695

Induced Demand

Induced Demand
BusinessHigh supportEconomics
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Updated 2026-07-31

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INTRODUCTION

English translation pending.

CORE DEFINITION

An economic phenomenon, also called latent demand, in which added capacity is absorbed by demand that was previously suppressed, so the extra supply produces more consumption rather than relief. The classic case is highway expansion: wider roads attract trips that were not previously made and congestion returns. It applies wherever demand is elastic and was previously constrained by scarcity, cost, or inconvenience.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

- Capacity skepticism: ask what suppressed demand a new supply will release. - Constraint shift: manage demand instead of adding supply once the system saturates. - Personal audit: check whether a faster tool produced free time or simply more work.

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Anchor fast decisions

A congested system holds back demand that would exist at a lower cost of use, whether that cost is time, money, or effort. Adding capacity lowers the effective cost, which releases the suppressed demand until the system returns to roughly its previous level of saturation. The gain is consumed by new usage rather than banked as relief, which is why the intervention appears to fail even when it works as designed.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Induced_demandZH · Explicit
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