What is a Rival Good
A rival good is a type of good that may only be possessed or consumed by a single user. Using a rival good prevents its use by other possible users. Rival goods can be durable, which means that users may use them one at a time, or nondurable, which means that consumption destroys the good, allowing only one user to enjoy it.
BREAKING DOWN Rival Good
Because these types of goods can only be used or occupied by one person, competition is created for their consumption. Consumers become rivals in an attempt to obtain these goods. For example, a skateboard represents a durable good because other consumers may use it after the current rider is finished. A nondurable good, such as a cup of coffee, will perish after consumption. Only one consumer will drink the coffee, and after it is gone, there will be nothing left for another consumer to use.
Non-rival goods are the opposite of rival goods. These goods allow consumption or possession to multiple users. National parks, roads and the Internet are examples of non-rival goods.
What Rival Goods Mean for Sales and Pricing
The competitive nature of rival goods can increase their value to the individuals who seek them. This is especially true for the travel, hospitality and entertainment industries. Rival goods can include seats on an airplane or for a Broadway performance. Likewise, they can include a reserved seat at a restaurant. The higher the demand is for rival goods can allow a business to exert more pricing power. The limits on the availability coupled with demand means businesses that offer such rival goods have the leeway to set prices higher.
Apparel is also rival good since only one person might wear a specific article of clothing at a time. Competition for this type of rival good is compounded by the availability of apparel in sizes that meet each consumer’s needs. Manufacturers might only produce limited quantities of products for certain sizes. That means consumers who require hard to find sizes must compete with each other procure the items they need.
Demand for rival goods can drive concentrated retail sales at holiday times as consumers race to procure items as gifts before they sell out, or while certain discounts are available. This type of shopping behavior has been used to retailers’ advantage in particular during Black Friday sales events that play into the nature of rival goods. For example, if a rival good is in high demand but has limited availability, retailers might advertise plans to offer it for sale specifically on Black Friday.