Scarcity value is an

economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...

factor describing the increase in an item's relative

price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...

by a low

supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...

. Whereas the prices of newly manufactured products depends mostly on the ''cost of production'' (the cost of inputs used to produce them, which in turn reflects the scarcity of the inputs), the prices of many goods—such as antiques, rare stamps, and those raw materials in high demand—reflects the scarcity of the products themselves. In terms of partial-equilibrium supply and demand, the markets where prices are "cost-determined" have a supply curve that is very elastic or even horizontal, so that an increase in demand raises the quantity of production much more than the price. The price mostly reflects the scarcity of the inputs but not that of the product. On the other hand, those items with scarcity value have inelastic or even vertical supply curves, so that an increase in the demand for the product mostly increases the price and not the quantity supplied. The seller of the product receives a price higher than the cost of producing the item and so receives a significant scarcity rent or producer's surplus when demand is high. Note that the cost of production may be close to zero, as with a rare stamp, so that the entire price consists of scarcity rent. In a contribution by biologists Courchamp ''et al.'' (2006) it is argued that rarity value (as they call scarcity value) may sometimes contribute to the over-exploitation of wildlife or rare biological systems. Rarity leads to a high unit price of a species, hence to higher incentives to catch, which in turn increases rarity, inducing a higher price, higher incentives, and so on. An ongoing example of this kind of economic–biological feedback might be the case of the

bluefin tuna Bluefin tuna is a common name used to refer to several species of tuna A tuna is a saltwater fish that belongs to the tribe Thunnini, a subgrouping of the Scombridae (mackerel) family. The Thunnini comprise 15 species across five genera, th ...

In literature

In Mark Twain's novel ''

Tom Sawyer Thomas Sawyer () is the titular character of the Mark Twain novel ''The Adventures of Tom Sawyer'' (1876). He appears in three other novels by Twain: '' Adventures of Huckleberry Finn'' (1884), '' Tom Sawyer Abroad'' (1894), and '' Tom Sawyer, ...

'', he describes the titular character's revelation regarding a key driver of activity: "Tom said to himself that it was not such a hollow world, after all. He had discovered a great law of human action, without knowing it – namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain."

References

Scarcity {{Econ-stub

In literature

See also

References