THE EFFECT OF SCARCITY ON ANTICIPATED PRICE APPRECIATION

Researchers in psychology and marketing have found that consumers' per ceptions and evaluations of a product's attractiveness, desirability, expensiveness, quality, and taste are affected by knowledge that the p roduct is scarce. This study examines scarcity's effect on a new varia ble-anticipated price appreciation. Although scarcity does not affect a product's actual potential for price appreciation, news reports of s carce collectibles that have appreciated in value may lead people to d evelop naive economic theories associating scarcity with price appreci ation. Consistent with this expectation, we found that scarcity increa sed the anticipated price appreciation of two collectible products. Th e practical implications of this result are discussed along with issue s for future research.