Constraints on the ability to adjust production capacity present an operation challenge for managers when customer demand is uncertain, as in the case of new product launch. While approaches such as flexible manufacturing seek to improve the responsiveness of the supply chain to demand variability, less emphasis has been placed on how supply constraints influence customer demand. This research extends existing theories of innovation diffusion under supply constraints, accounting for waitlisting when customer demand exceeds product availability, and the effect of inventory coverage on retail pricing, applied to the diffusion of the Toyota Prius in the United States.