Rarity in the market

Many experts and economists have pointed out that the market price levels are determined by the rarity in the markets. When resources are relatively rarer, their prices are higher. There are many types of rarity according to its causes.

Firstly, some rarity is caused by its natural limitation. For example, the rarity of natural resources are pre-determined by nature, our human beings can do little to improve such situation. Secondly, some rarity is caused by the limitation by the labour force. In some industries, human talent is playing a very important and determinant role in terms of outcomes; therefore, their prices could be high when the resources for extremely skilful labours are limited. However, such rarity may not last very long, as technology can replace humans to provide even more accurate and precise production. Thirdly, rarity can be caused by the market demand. In some market, rarity could be made by the supply side, especially in the luxury product industries. Such rarity can be varied over time as tastes in the markets vary over time. In some markets, rarity is caused by a sharp increase in the demand in the market. A sharp increase in the demand is caused by varies reasons, such as a sharp increase in the population income, or a potential crisis which leads to a sharp increase in the demand. Such rarity is usually temporary, in the long term, such rarity can be eased.

Since having understanding of some causes for rarity in the market, we can see that apart from rarity caused by nature, most causes of rarity are not permanent. This means over time, some of the rarity can moderate itself over time, from this point of view, the price levels in the markets are likely to decline over time when the rarity is being eased over time.