alt Hacker NewsThat doesn't really make sense, losing your whole investment is already a strong incentive to not produce something you can't sell.
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A factory might have a minimum order quantity of 10000 units for a product. The products cost $1 landed.
You know you can sell 4000 of those products for a total of $15k.
This might become a bad deal if dealing with the 6000 extra units costs you money.
You can produce so little people take anything you give them - like it was in the Soviet union.
Clothing has a huge profit margin (when manufactured overseas) especially at the higher end (for brands which do not invest in local production, which is most, because it is also hard to beat Chinese quality). It's better for these brands to over-produce on some items and lose the low-cost inventory, than to under-produce and not meet market demand, to not offer a range of sizes and varieties to meet individual taste, and not achieve wide distribution that's necessary to grow market demand. That's why regulation is needed here.
Assume the legislation is trying to reduce a real problem. Why does that problem exist if that incentive is actually really strong in practice?
I assume it's not actually a really strong incentive in context.