Difference between revisions of "Artificial scarcity"
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'''Artificial scarcity''' describes the [[scarcity]] of items even though the technology and [[Economic production|production]] capacity exists to create an abundance. The term is aptly applied to non-rival resources, i.e. those that do not diminish due to one person's use, although there are other resources which could be categorized as artificially scarce. The most common causes are [[monopoly]] pricing structures, such as those enabled by [[intellectual property]] rights or by high [[fixed costs]] in a particular marketplace. The inefficiency associated with artificial scarcity is formally known as a [[deadweight loss]]. | '''Artificial scarcity''' describes the [[scarcity]] of items even though the technology and [[Economic production|production]] capacity exists to create an abundance. The term is aptly applied to non-rival resources, i.e. those that do not diminish due to one person's use, although there are other resources which could be categorized as artificially scarce. The most common causes are [[monopoly]] pricing structures, such as those enabled by [[intellectual property]] rights or by high [[fixed costs]] in a particular marketplace. The inefficiency associated with artificial scarcity is formally known as a [[deadweight loss]]. | ||
| − | With nearly all goods, a trade-off occurs when decisions are made about production. The graph{{which?}} shows the economic anomaly that occurs with artificially scarce products. Because leather boots consume resources, a trade-off is noticed between running shoes and boots; i.e. in order to produce more boots one has to produce fewer running shoes because of limited resources. This trade-off is illustrated by a move from P1 to P2 in the Production Possibilities graph on the left. | + | With nearly all goods, a trade-off occurs when decisions are made about production. The graph{{which?|date=May 2012}} shows the economic anomaly that occurs with artificially scarce products. Because leather boots consume resources, a trade-off is noticed between running shoes and boots; i.e. in order to produce more boots one has to produce fewer running shoes because of limited resources. This trade-off is illustrated by a move from P1 to P2 in the Production Possibilities graph on the left. |
With computer software, no significant trade-off occurs. To produce more of a certain piece of digital information, since virtually no resources are used to copy the information there is no trade-off with the production of other things, like shoes and boots. In essence, problems of artificial scarcity usually arise when a good that was once scarce becomes abundant due to extreme increases in productivity and technology.<ref>{{cite web |url=http://www.automation.com/resources-tools/articles-white-papers/articles-by-jim-pinto/the-problems-of-scarcity-abundance |title=The Problems of Scarcity & Abundance |publisher=Automation.com}}</ref> | With computer software, no significant trade-off occurs. To produce more of a certain piece of digital information, since virtually no resources are used to copy the information there is no trade-off with the production of other things, like shoes and boots. In essence, problems of artificial scarcity usually arise when a good that was once scarce becomes abundant due to extreme increases in productivity and technology.<ref>{{cite web |url=http://www.automation.com/resources-tools/articles-white-papers/articles-by-jim-pinto/the-problems-of-scarcity-abundance |title=The Problems of Scarcity & Abundance |publisher=Automation.com}}</ref> | ||
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== Economic actions that create artificial scarcity == | == Economic actions that create artificial scarcity == | ||
| + | {{Unreferenced section|date=June 2012}} | ||
* [[Cartels]] | * [[Cartels]] | ||
Revision as of 15:42, 19 June 2012
- ↑ Script error: No such module "citation/CS1".
- ↑ Phi Kappa Phi (1952). Phi Kappa Phi journal. Honor Society of Phi Kappa Phi.