Rival Good
Categories: Company Management
A rival good is a good that's your sworn enemy.
Okay, not exactly. If someone tried to take a good from you, and that meant you would be getting less of the good, it’s a rival good. Using a rival good means that others can’t use it.
For instance, a hot dog at the fair. If you eat it, nobody else can have that hot dog. Sure, you could share it, but it’s still a rival good. You each only would get half of a hot dog, say 0.5 utils each instead of the 1 util that comes with a whole hot dog. Rival goods have only so many utils to go around. They're limited in the utils they can supply.
Many goods are rival goods. Pretty much all food. Only one person can wear a shirt at a time, so things like clothes and most personal items are too.
Whoa, check out those fireworks (you’re still at the fair). At first, only a dozen people see the fireworks. They get 1 util each, which means the fireworks gave out a total of 12 utils. As they kept going, more and more people started watching. 50, then 100...each person getting a util. The fireworks went from giving 12 utils to 100 utils.
Fireworks is an example of a non-rival good: a good where others consuming it doesn’t prevent you from consuming it. Just because others are enjoying the fireworks doesn’t mean you can’t. You totally can. And you do. The internet, national parks, and streets are all non-rivalrous goods too.
Whether a good is rival or non-rival determines a lot about its price, how the good is handled by sellers, and how the good functions in the market. Consumers compete for rival goods in the market, matching up consumers with products to consume. With non-rival goods, free riders become a problem for sellers. Say people had to enter the fair to pay to see the fireworks show, yet there are people standing right outside the fairgrounds watching the fireworks show for free. You might see sellers trying to choose where to put the fireworks show to limit who sees them, in order to incentivize people to pay if they want to consume.
Related or Semi-related Video
Econ: What are Superior v. Inferior Good...4 Views
And finance Allah shmoop What are superior and inferior goods
All right Well in casual conversation you might say that
Reese is is a superior candy bar Teo the Baby
Ruth Or that broccoli is an inferior vegetable Teo pretty
much every other one in economic superior and inferior goods
aren't union yang Superior goods also known as luxury goods
are actually a subtype of normal goods Well normal goods
or goods whose demand goes up when incomes go up
Yeah like normal normal goods in L A include air
conditioners and kombucha and designer clothes Normal goods in New
York City include flannel button ups noise cancelling headphones and
of course pizza The more money people make the more
they'LL be spending on these goods if they're getting technical
while normal goods have a positive income Elasticity of demand
elasticity measures how sensitive we are two goods when they
change in price or when our buying power changes The
more elastic something is the more sensitive we are to
it The more any elastic something is the less sensitive
we are to it Well normal goods have a positive
elasticity of demand meaning will want more normal goods as
our buying power rises Superior goods or luxury goods are
a type of normal Good superior goods like normal goods
have an incoming elasticity of demand that's greater than zero
So what makes a superior good a superior good Well
a superior good has an income elasticity of demand That's
not on ly greater than zero It's greater than one
Superior goods are just extreme versions of normal goods The
increase in demand for superior goods is greater than for
normal goods given a certain percent increase in income When
people are rolling in dough they have more money to
play with making their demand more any elastic They have
so much money that the basics are covered so they
can spend a higher proportion of their income on luxurious
things Superior goods are things like fancy TVs fancy cars
fancy clothes basically anything fancy Okay so we have the
normal goods Remember which have a positive income elasticity of
demand and superior goods also known as luxury goods which
are extreme normal goods with an incoming last the city
over one We also have inferior goods which is the
gin in the yang of normal goods while normal goods
have a positive income Elasticity of demand in cheerier goods
have a negative income Elasticity of demand will What is
all this means means inferior goods are things people want
less of as their income arises as people's buying power
increases well they'LL usually start substituting inferior goods for normal
ones As you start making more money while you'LL probably
swap your inferior McDonald's coffee for Starbucks a normal good
you might switch from riding the boss to driving a
car Another substitution of an inferior good for a normal
good The more money you make the last you'LL demand
inferior goods As you climb the corporate ladder you'LL forget
inferior goods all together like they were never a part
of your life But don't worry There's a horseshoe theory
for inferior and superior goods For instance if you find
yourself in your corner office overlooking the city missing the
good old days when you had duct tape shoes and
inferior good very inferior Good There's a superior good for
that right Like you Khun by this superstar taped sneaker
a superior good at five hundred thirty dollars and then
reminisce about well the old inferior good days Yeah there's
a luxury market for everything nowadays Yeah you've seen it