It's crazy for a near-commodity with ample supply, but if there's a supply shortage and (in the short-term) inelastic demand - because it's a relatively cheap t

It's crazy for a near-commodity with ample supply, but if there's a supply shortage and (in the short-term) inelastic demand - because it's a relatively cheap thing that's required for a much larger product - then it may easily be economically effective to restrict supply instead of filling it. E.g. if you can make 100k widgets for all of which you have customers at a dollar each, then in a supply shortage with limited alternatives you may find that if you credibly cut supply to 80k widgets, so that some customers will actually be left out, then they might be willing to pay two dollars per widget (so, 160k instead of 100k for that toy example), so you get more money for less goods.