Your basic explanation of supply and demand is quite accurate. It's exactly as I learned it in business school. The market clearly wants more purebreds. If people were out paying $1,000 for plain brass doorknobs then I would say there is no overabundance of doorknobs. People are paying $1,000 and more for purebred dogs, so obviously there is a continuuing demand for purebred dogs.

Here's the big difference: doorknobs don't have feelings, and they don't breed. If you buy a doorknob, decide you don't like and throw it away, no big deal. It's your money. If someone buys a purebred, and decides to throw it away (and it happens ALL THE TIME) that's a problem.

Furthermore, people have a tendancy to avoid spaying/neutering their purebreds, and so those dogs go out and breed, creating the overpopulation we're talking about.

Another point: a defective doorknob is no big deal. Throw it away, melt it down, whatever. It's your money. A "defective" dog, OTOH, is still a creature that has feelings and can suffer. Purebreds that don't meet whatever weird specifications people want are frequently abandonded or kenneled in cruel, crowded conditions. This is common with racing hounds, for example. Some friends of ours have a rescued greyhound that wasn't fast enough for the racers (and the majority of the dogs aren't). She had scars all over her from living in crowded conditions which encourages the dogs to constantly fight.

So the point is: dogs and other animals should be treated like simple market commodities. They are beings with feelings. They can suffer. We all contribute to the abuse of animals in some way or other, but we can at least start correcting the problem by avoiding the most obvious, common forms of abuse. Don't encourage breeders by buying purebreds. Get your pet at your local animal shelter, purebred rescue operation, or pound.