Using price to manage demand is a well-studied discipline in the airline and railway industries, where individual seats may be priced differently to manage variable demand into fixed capacity.

ECONOMIST: Excessive

Issuers want to avoid offering variable-rate demand obligations because they fear that if rates rise or their creditworthiness declines, they may not be able to roll over short-term borrowings.

FORBES: Move Over Treasuries, Muni Bonds Are The New Bellwether

To keep borrowing costs from exploding, municipal borrowers sought big bank letters of credit as backstop guarantees on the shorter than they wanted variable-rate demand obligations they turned to.

FORBES: Muni Bond Default Concerns Are Real