What is Rival Good?
1210 reads · Last updated: December 5, 2024
A rival good is a product or service that can only be consumed by one user or a limited number of users. The rivalry is among consumers, whose competition to obtain the good can create demand and drive up its price. A non-rival good, on the other hand, can be used simultaneously by many consumers.Most common household products and supermarket foods are rival goods. A bar of soap or a bottle of beer can only be consumed by a single person. If the product is in short supply, the rivalry among consumers is intensified. A limited-edition designer t-shirt is a rival good that may increase in price simply because demand outweighs supply.A non-rival good may be consumed by many people at the same time without any pressure on its supply. Streaming videos are an example.
Definition
Competitive goods are products or services that can only be consumed by one user or a limited number of users. Competition among consumers creates demand and drives up their prices. In contrast, non-competitive goods can be used by multiple consumers simultaneously.
Origin
The concept of competitive goods originates from the economic principle of scarcity. As market economies developed, the limited nature of resources made competitive goods a focal point of study. Early economists like Adam Smith and David Ricardo explored issues of resource allocation and competition.
Categories and Features
Competitive goods can be categorized into durable and non-durable goods. Durable goods, such as cars and appliances, have a long lifespan and are purchased infrequently. Non-durable goods, like food and daily necessities, have a short lifespan and are purchased frequently. The main features of competitive goods are their limited supply and the competition among consumers, which often leads to price fluctuations.
Case Studies
A typical case is Apple's iPhone. Each new model release sees intense competition among consumers, leading to price increases and shortages. Another example is the luxury brand Hermès' Birkin bag, which, due to its limited production and high demand, often maintains a high price.
Common Issues
Investors may face issues such as price volatility and supply-demand imbalances when purchasing competitive goods. A common misconception is that all high-priced goods are competitive goods, but in reality, prices depend on supply-demand relationships, not the competitiveness of the goods themselves.
