Why do some businesses choose scarcity as their business model instead of raising the price to meet the demand?

Question

Here are some examples of what I'm talking about:

• Mass events such as Burning Man, the Olympics, and the World Cup sell out tickets very quickly which forces fans to resort to scalping or using bots if they want to secure a spot
• Concerts of popular artists sell out very quickly which creates a massive scalping market
• Limited editions of clothing suffer from automated bots buying up and reselling almost all of their stock in a matter of seconds
• Popular restaurants sometimes require making a reservation several days in advance or don't take reservations and have everyone wait in line for a long time
• Daycares in Canada and the US frequently have waiting lists of several years which forces parents to sign up for one as soon as they conceive

I'm sure there are more examples of such practices that I'm not aware of. All of them could have addressed the difficulty of obtaining the product through some form of dynamic pricing - as demand goes up you increase the price, as demand goes down you decrease it. Various forms of auctions could also be used to determine the price, if required. This is how the world of airlines operates these days - planes are almost never sold out, but you might find that a ticket costs 10x the original price if you buy one right before departure.

1. What's the name for such business policies in economic theory?
2. Why would a business choose to follow such practices?
3. Can this strategy actually result in higher profits over the long term or are businesses losing money by not using dynamic pricing?

Answer 1

I think it's more about customer's perception. If they were to raise their prices, they might be perceived as blood-thirsty artists/restaurants/etc. who take advantage of their customers. Instead, by keeping the prices low and having queues outside, it becomes a kind of advertising.

Answer 2

Well, this is a hot topic where I live. Basically most of Central and Northern Europe is suffering from an overheated economy in certain sectors. So, if you want to get a house built or some construction repaired, or have some maintenance done on a gas boiler, you are looking at waiting a long time to get someone in, and you are looking at low quality work in general. I won't mention the equivalent problems in health services because that's more a state-vs-corporate pay struggle.

The problem as I see it is that right now personal TIME is way more important than SAVINGS. People simply prefer to earn less and have more quality life, because their sense of SECURITY in potential earnings precludes the need for SAVINGS. In short, people are lazy and prefer to earn enough and work less, rather than work more and earn in excess.