Rationing of sales and price setting

Casual empiricism suggests that firms are more often constrained by lack of demand than production capacity. Can this evidence be interpreted as indicating that activity is demand constrained implying that there is room for demand management policies? This is not necessarily the case. In a setting with imperfect competition where firms choose prices and production before the actual level of demand is known, it is found that the more elastic is demand, the more likely is excess demand to prevail and vice versa. However, demand management policies do not affect the prevalence of imbalances between demand and supply although real policies may affect the level of production, i.e. discrepancies between demand and supply are not necessarily a reliable indicator for the scope of demand management policies.