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Concept
Artificial scarcity
Summary
Artificial scarcity is scarcity of items despite the technology for production or the sufficient capacity for sharing. The most common causes are monopoly pricing structures, such as those enabled by laws that restrict competition or by high fixed costs in a particular marketplace. The inefficiency associated with artificial scarcity is formally known as a deadweight loss.
In a capitalist system, an enterprise is judged to be successful and efficient if it is profitable. To obtain maximum profits, producers may be restricting production rather than ensuring the maximum utilisation of resources. This strategy of restricting production by firms in order to obtain profits in a capitalist system or mixed economy is known as creating artificial scarcity.
Artificial scarcity essentially describes situations where the producers or owners of a good restrict its availability to others beyond what is strictly necessary. Ideas and information are prime examples of unnecessarily scarce products given artificial scarcity as illustrated in the following quote: If you have an apple, and I have an apple, and we exchange apples, then you and I will still each have one apple. But if you have an idea, and I have an idea, and we exchange these ideas, then each of us will have two ideas.
Even though ideas as illustrated above can be shared with less constraints than physical goods, they are often treated as unique, scarce, inventions or creative works, and thus allotted protection as intellectual properties in order to allow the original authors to potentially profit from their own work.
Cartels, monopolies and/or rentier capitalism
Competition regulation, where regulatory uncertainty and policy ambiguity deters investment.
Copyright, when used to disallow copying or disallow access to sources. Proprietary software is an example. Copyleft software is a counterexample where copyleft advocates use copyright licenses to guarantee the right to copy, access, view, and change the source code, and allow others to do the same to derivatives of that code.
Official source
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