Hundreds of firms are in the fashion industry, making all types of clothing, jewelry, and other fashion accessories. Despite all this competition, only a few colors are offered each year. Firms not producing clothing in the predominant colors have a hard time selling their clothes because customers have a hard time finding accessories and matching clothing. In addition, offering too many colors is costly since stores would have to carry far larger inventories. Which of the models presented in this chapter does the fashion industry seem to reflect? Suppose this year’s colors are green and purple, but the public would buy more if this year’s colors were red and white. How would a firm, knowing this, take advantage of this information?