Living Economics

Faking It
Scarcity value does not depend on technical competence but scarcity itself.

In Shenzhen, China, there is a village where oil paintings are re-produced from photos by thousands of piece-rate painters. The photos could be pictures of the Mona Lisa by de Vinci or the sun flower by Van Gogh. Or they could be just family portraits.

The original paintings could be worth millions of dollars, but the going rate of a copy of the Mona Lisa or an Andy Warhol’s Marilyn Monroe is just US$100 or much lower.

Meanwhile, in America, living artists whose works command high prices also employ teams of assistants to execute their works (WSJ 6/3/2011).

The only difference is that living artists could personally or remotely supervise their assistants while de Vinci or Van Gogh could no longer do. Living artists could also control the number of copies produced while the Shenzhen oil-painting village could produce any number of copies.

Technically, the paintings re-produced at Shenzhen and the paintings supervised by living artists could be equally competent. But their scarcity values could not be further apart.

While most people would not buy a re-produced Mona Lisa oil painting to impress their friends who know there can only be one copy of the original works, they may buy a knock-off Louis Vuitton hand bag hoping to fool innocent passersby into believing that they are people with substantial means (Economist 4/2/2011).

References:
Access Tools
• Advanced Search
• Browse Micro
Comparative advantage (14) Competitive strategy (27) Costs and opportunities (53) Entrepreneurship (3) Externality (28) Free Market Solutions (17) Free Ridership (3) Game Theory (22) Incentives (13) Income Distribution (25) Information (19) Labor Market (24) Marginal optimization (33) Market Demand (17) Market Entry (9) Market Exit (2) Market Intervention (12) Market Structure (29) Market supply (4) Material Flow (2) Miscellaneous (3) Price Discrimination (17) Pricing Strategy (46) Profit maximization (48) Property Rights (42) Regulation (16) Rent Seeking (2) Risk Taking (12) Scarcity (10) Tastes & Preferences (27) Taxes (7) Technology (9) Type of goods (31) What Price Means (27)
• Browse Macro
Boom and Bust (9) Budget Balance (12) Comparative advantage (13) Economic Development (1) Economic Indicators (6) Fiscal Policy (12) Incentives (1) Income and output (25) Income Distribution (5) Labor Market (6) Money and Credit (20) Regulation (5) Rent Seeking (1) Saving (6) Taxes (4) Technology (1) Trade and Foreign Exchange (30)
• Glossary
List All
Search

• Microeconomics Lectures • Macroeconomics Lectures
Instructor
• Instructor Log in • Sample TOC • Demo/Register • Video Tour
Student
• Student Log in
Close
Instructor Log in

Class
Close
Student Log in


Open Menu
Term
Definition