Rivalry (economics)
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In
economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...
, a
good In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil. The specific meaning and etymology of the term and its ...
is said to be rivalrous or a rival if its consumption by one
consumer A consumer is a person or a group who intends to order, or use purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. A good is considered non-rivalrous or non-rival if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. A good is anti-rivalrous and inclusive if each person benefits more when other people consume it. A good can be placed along a continuum from rivalrous through non-rivalrous to anti-rivalrous. The distinction between rivalrous and non-rivalrous is sometimes referred to as jointness of supply or subtractable or non-subtractable. Economist
Paul Samuelson Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "h ...
made the distinction between private and public goods in 1954 by introducing the concept of nonrival consumption. Economist Richard Musgrave followed on and added rivalry and excludability as criteria for defining consumption goods in 1959 and 1969.  


Rivalry

Most
tangible Tangibility is the property of being able to be perceived, especially by the sense of touch. Metaphorically, something can also be said to be "cognitively tangible" if one can easily understand it. Law In criminal law, one of the elements of ...
goods, both durable and nondurable, are rival goods. A hammer is a durable rival good. One person's use of the hammer prevents others from using the 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 In the Internet, a domain name is a string that identifies a realm of administrative autonomy, authority, or control. Domain names are often used to identify services provided through the Internet, such as websites, email services, and more. ...
s. In more general terms, almost all private goods are rivalrous.


Non-rivalry

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. More generally, most
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
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 use a particular
language Language is a structured system of communication that consists of grammar and vocabulary. It is the primary means by which humans convey meaning, both in spoken and signed language, signed forms, and may also be conveyed through writing syste ...
, the more valuable that language becomes. 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, use of public roads, the Internet, or police/law courts 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 as a binary category, where many goods are somewhere between the two extremes of completely rival and completely non-rival. A perfectly non-rival good can be consumed simultaneously by an unlimited number of consumers.


Anti-rivalry

Goods are anti-rivalrous and inclusive if the consumer’s enjoyment increases with how many others consume the good. The concept was introduced by Steven Weber (2004), saying that when more people use
free and open-source software Free and open-source software (FOSS) is software available under a license that grants users the right to use, modify, and distribute the software modified or not to everyone free of charge. FOSS is an inclusive umbrella term encompassing free ...
, it becomes easier and more powerful for all users. Lessig noted that any
natural language A natural language or ordinary language is a language that occurs naturally in a human community by a process of use, repetition, and change. It can take different forms, typically either a spoken language or a sign language. Natural languages ...
is anti-rivalrous, because its utility increases with how much it is used by others. Cooper noted that efforts to combat climate change are perversely anti-rivalrous — any country acting as a free rider will benefit from the efforts of others to combat this problem, even while not contributing itself..


Types of goods based on rivalry in consumption and excludability


See also

*
Anti-rival good An anti-rival good is one where the more people share it, the more utility each person receives. It is the opposite of a rival good. Examples include software and other information goods created through the process of commons-based peer product ...
*
Free-rider problem In economics, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Free riders may overuse common pool resources by not ...
* Metcalfe's law *
Network effect In economics, a network effect (also called network externality or demand-side economies of scale) is the phenomenon by which the Value (economics), value or utility a user derives from a Goods, good or Service (economics), service depends on th ...
*
Rent-seeking Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth. Rent-seeking activities have negative effects on the rest of society. They result in reduced economic effi ...


References

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