Rival Good
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 generates demand and drives up prices. In contrast, non-competitive goods can be used by multiple consumers simultaneously.
Origin: The concept of competitive goods originates from the theory of scarce resources in economics. As early as the 18th century, Adam Smith mentioned in 'The Wealth of Nations' that the limited nature of scarce resources leads to competition among consumers, affecting prices and market behavior.
Categories and Characteristics: Competitive goods can be divided into two categories:
1. Fully Competitive Goods: These goods are entirely exclusive in consumption, such as a loaf of bread or a bottle of water.
2. Partially Competitive Goods: These goods have a certain degree of exclusivity but can be shared in some cases, such as a taxi ride or a hotel room.
The main characteristics of competitive goods include:
- Scarcity: Resources are limited and cannot meet everyone's needs.
- Exclusivity: Once consumed by one person, others cannot consume the same good.
- Price Volatility: Prices are prone to fluctuations due to imbalances in supply and demand.
Specific Cases:
1. Limited Edition Designer T-Shirts: A brand releases a limited edition of designer T-shirts, with only 100 pieces available. Due to the limited quantity, competition among consumers drives up the price.
2. Concert Tickets: Tickets for a famous singer's concert are limited, with demand far exceeding supply, leading to skyrocketing prices and even scalping.
Common Questions:
1. Why do the prices of competitive goods fluctuate? Due to limited supply and high demand, competition among consumers drives up prices.
2. What is the main difference between competitive and non-competitive goods? Competitive goods can only be consumed by one or a limited number of users, while non-competitive goods can be used by multiple users simultaneously.
