8.

  The bell for second period rang, all five Business Studies students were in class, but Mr. Bergman was running a little late. Gretchen was sitting next to Tracy. The girls were gushing over Tracy’s new Petit Velo designer handbag.

  “Oh my god is that real gold lining the clasp,” Gretchen said admiring the small brown leather hand back with the monogrammed P/V stitched into the side of it and a small gold clasp with gold trim around it.

  “Oh yeah, it’s actual 24 karat, I’ve been saving up for months, all those shifts at Berry’em, the frozen yogurt shop, have finally paid off,” Tracy said smiling as she ran her hand over it.

  Mr. Bergman walked in, “Good morning class,” he looked over his students and Tracy’s purse caught his eye, “Oh, Petit Velo, very nice Ms. Tracy,” Mr. Bergman smiled, “I’ve bought more than a few of those purses in my day, my bitch ex-wife was a big fan of them. That’s a high-end brand. I bet you spent a good deal of capital on it,” He said, leaning against the wall in front of the class, “It’s a new one right? New design?”

  “Yeah, it’s so hard to find the older designs, they’re like collector’s items or something, so this one will hold it’s value,” Tracy said.

  “Funny that you mention that,” Mr. Bergman said, “I read an interesting expose about Petit Velo the other day. By the way, Petit Velo means little bicycle in French, the company was established in nineteen forty-seven and started making fashionable bike messenger bags until they went bankrupt and a Husband and Wife purchased their excess leather stock and production warehouse. The wife had a design for a leather handbag and the couple figured since they were pretty much buying the company outright why not keep the name. Though keeping the name worked out for them, evidence being Tracy’s fashionable new accessory, you should never keep the name of a business acquired in failure.”

  “How the hell do you know all this?” Lewis asked.

  “I love reading Wikipedia when I get hammered,” Mr. Bergman said.

  “Now, Tracy, you mentioned that the older designed bags are collectible, hard to find, do you know why that is?” Mr. Bergman asked.

  “Well, it’s an expensive and exclusive brand, and they’re always coming out with new designs, so I guess it doesn’t make that much sense to keep making the same bag forever when you have a new better bag by the next year,” Tracy said.

  “You’re somewhat right, but it goes a little deeper than that, It’s actually kind of devious what the real reason is,” Mr. Bergman said, “Tracy, Gretchen, Petit Velo is a trendy brand isn’t it, every girl wants at least one Petit Velo bag in her inventory, right?”

  “Definitely, I’m so happy!” Tracy said, clinging her purse.

  “Yeah, they are nice,” Gretchen said.

  “Oh Gretchen, you’re glasses only magnify the green specter of envy glowing in your eyes,” Mr. Bergman laughed.

  “Okay,” Gretchen rolled her eyes, “I want one, I want one so bad,” she said.

  “That’s what I thought,” Mr. Bergman said, “Now let’s say that the older models were a little easier to get your hands on, would you mind having a Petit Velo bag that was a season or two behind the trend?” he asked.

  Stolen content alert: this content belongs on Royal Road. Report any occurrences.

  “Umm, I guess not,” Gretchen said, thinking, “I mean, it’s a purse, my mom has used the same purse for probably ten years, and Petit Velos are so nice, I wouldn’t mind having one a little older if I could get a deal on it.”

  “Do you know why you can’t get a deal on one? You girls want to know the real reason they’re so hard to come by?” Mr. Bergman said.

  “It’s going to be because of some messed up reason, isn’t it?” Tracy asked.

  “Not messed up, more devious really. You see, Petit Velo has a stealth buyback campaign whenever a new line is about to be released for the lucky girls like Tracy to pay top dollar for. Petit Velo hires companies to send people all across America and Europe, from the bright lights of Paris and New York to the humble thrift shops of Utah and Indiana, and they buy out all the stock of their handbags and other various fashion accessories, and proceed to have them destroyed, According to an article I read Petit Velo destroyed over twenty million dollars of inventory last year alone.”

  “That doesn’t make any sense,” Rob said, “It’s inventory they’ve already made and put out, it’s a sunk cost, why would they spend more money just to destroy it?”

  “Excellent question Rob. I’ll meet that with another question, what do you think the profit margin on Tracy’s, admittedly, very fashionable accessory is?”

  “Probably around nintey percent,” Johnny said.

  “Yeah, it costs them nothing to make those bags thanks to all the third world Honduran slave labor they employ,” Lewis said.

  “So Rob, which one of these lovely ladies would you rather buy one of your purses,” Mr. Bergman held his arm out towards Gretchen and Tracy, “Would you like Tracy to buy a new purse from you at a nintey percent profit margin for you or would you prefer someone like Gretchen go a second-hand store and make a purchase you don’t see a dime from,” he said.

  “Now, in destroying Gretchen’s option to buy second hand the goal is to turn a Gretchen into a Tracy,” Mr. Bergman smiled, “Maybe start with losing the glasses, just a suggestion.”

  The boys got a quick laugh out of that, Johnny looked at Gretchen, and she rolled her eyes at him as he smirked at her.

  “This model of destroying inventory to keep the perception of your product’s value higher is related to a concept in business called artificial scarcity. Petit Velo has, in a sense, a monopoly on Petit Velo products. If I make a purse and stitch that little P/V monogram on it, my ass will get sued into the stone age. It doesn’t matter if it’s just as good a bag as Tracy’s, it’s not a Petit Velo. Only Petit Velo can control the supply of Petit Velo bags. I hope you’ve picked up in one of my drunken ramblings that Supply and Demand are very interwoven with each other,” he turned towards Johnny, “If you have control of the supply in certain markets, that means that you can also manipulate the demand,” he said giving Johnny a quick wink.