Rivalry (economics)
Encyclopedia
In economics
, rivalry is a characteristic of a good. A good can be placed along a continuum ranging from rivalrous (rival) to non-rival. The same characteristic is sometimes referred to as subtractable or non-subtractable . A rival (subtractable) good is a good whose consumption
by one consumer
prevents simultaneous consumption by other consumers. Put differently, a good is considered non-rival (non-subtractable) if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. Non-rivalry does not imply that the total production costs are low, but that the marginal production costs are zero. In reality, few goods are completely non-rival as rivalry can emerge at certain levels. For instance, road (or internet) use is non-rival up to a certain capacity, after which congestion means that each additional user decreases speed for others. For that, recent economic theory views rivalry as a continuum, not binary category, , where many goods are somewhere between the two extremes of completely rival and completely non-rival.
Most goods, both durable
and nondurable, are rival goods . A hammer is a durable rival good. One person's use of the hammer presents a significant barrier to others who desire to use that hammer at the same time. However, the first user does not "use up" the hammer, meaning that some rival goods can still be shared through time. An apple is a nondurable rival good: once an apple is eaten, it is "used up" and can no longer be eaten by others. Non-tangible
goods can also be rivalrous. Examples include the ownership of radio spectra
and domain name
s. In more general terms, almost all private goods are rivalrous.
In contrast, non-rival goods may be consumed by one consumer without preventing simultaneous consumption by others. Most examples of non-rival goods are intangible. Broadcast television is an example of a non-rival good; when a consumer turns on a TV set, this does not prevent the TV in another consumer's house from working. The television itself is a rival good, but television broadcasts are non-rival goods. Other examples of non-rival goods include a beautiful scenic view
, national defense, clean air, street lights, and public safety (police and law courts).
More generally, most intellectual property
is non-rival. In fact, certain types of intellectual property become more valuable as more people consume them (anti-rival). For example, the more people using a particular programming language
, the more valuable that language becomes.
Goods that are non-rival are goods that can be enjoyed simultaneously by an unlimited number of consumers. Goods that are both nonrival and non-excludable
are called public good
s. It is generally accepted by mainstream economists that the market mechanism will under-provide public goods, so these goods have to be produced by other means, including government provision.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, rivalry is a characteristic of a good. A good can be placed along a continuum ranging from rivalrous (rival) to non-rival. The same characteristic is sometimes referred to as subtractable or non-subtractable . A rival (subtractable) good is a good whose consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
by one consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
prevents simultaneous consumption by other consumers. Put differently, a good is considered non-rival (non-subtractable) if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. Non-rivalry does not imply that the total production costs are low, but that the marginal production costs are zero. In reality, few goods are completely non-rival as rivalry can emerge at certain levels. For instance, road (or internet) use is non-rival up to a certain capacity, after which congestion means that each additional user decreases speed for others. For that, recent economic theory views rivalry as a continuum, not binary category, , where many goods are somewhere between the two extremes of completely rival and completely non-rival.
Most goods, both durable
Durable good
In economics, a durable good or a hard good is a good that does not quickly wear out, or more specifically, one that yields utility over time rather than being completely consumed in one use. Items like bricks or jewellery could be considered perfectly durable goods, because they should...
and nondurable, are rival goods . A hammer is a durable rival good. One person's use of the hammer presents a significant barrier to others who desire to use that hammer at the same time. However, the first user does not "use up" the hammer, meaning that some rival goods can still be shared through time. An apple is a nondurable rival good: once an apple is eaten, it is "used up" and can no longer be eaten by others. Non-tangible
Tangible property
Tangible property in law is, literally, anything which can be touched, and includes both real property and personal property , and stands in distinction to intangible property....
goods can also be rivalrous. Examples include the ownership of radio spectra
Radio spectrum
Radio spectrum refers to the part of the electromagnetic spectrum corresponding to radio frequencies – that is, frequencies lower than around 300 GHz ....
and domain name
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
s. In more general terms, almost all private goods are rivalrous.
In contrast, non-rival goods may be consumed by one consumer without preventing simultaneous consumption by others. Most examples of non-rival goods are intangible. Broadcast television is an example of a non-rival good; when a consumer turns on a TV set, this does not prevent the TV in another consumer's house from working. The television itself is a rival good, but television broadcasts are non-rival goods. Other examples of non-rival goods include a beautiful scenic view
View
A view is what can be seen in a range of vision. View may also be used as a synonym of point of view in the first sense. View may also be used figuratively or with special significance—for example, to imply a scenic outlook or significant vantage point:...
, national defense, clean air, street lights, and public safety (police and law courts).
More generally, most intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
is non-rival. In fact, certain types of intellectual property become more valuable as more people consume them (anti-rival). For example, the more people using a particular programming language
Programming language
A programming language is an artificial language designed to communicate instructions to a machine, particularly a computer. Programming languages can be used to create programs that control the behavior of a machine and/or to express algorithms precisely....
, the more valuable that language becomes.
Goods that are non-rival are goods that can be enjoyed simultaneously by an unlimited number of consumers. Goods that are both nonrival and non-excludable
Non-excludable good
In economics, a good or service is said to be excludable when it is possible to prevent people who have not paid for it from having access to it, and non-excludable when it is not possible to do so.- Examples :...
are called public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s. It is generally accepted by mainstream economists that the market mechanism will under-provide public goods, so these goods have to be produced by other means, including government provision.