Supply without Demand: The Paradox of Economies of Scale in the Case of Chris Gardner

Paulo Roberto Amorim, Paulo Roberto Amorim (2025): Supply without Demand: The Paradox of Economies of Scale in the Case of Chris Gardner.

Abstract

This paper examines the paradox of economies of scale through the real case of Chris Gardner, whose attempt to commercialize portable bone-density scanners illustrates the consequences of excess supply in the absence of effective market demand. Despite a technologically superior product, hospitals and clinics already possessed equipment capable of meeting their needs, making additional purchases economically unjustifiable. High fixed costs, low utilization rates, and market saturation resulted in diseconomies of scale rather than efficiency gains. The analysis highlights how misaligned expectations between entrepreneurial supply and institutional demand can lead to financial losses, even when innovation is present. This case provides an applied perspective on the economic principles of scale, sunk costs, and market structure.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economies of Scale, Excess Capacity, Market Demand, Sunk Costs, Health Technology, Innovation, Chris Gardner
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M21 - Business Economics; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

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