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Measuring the impact of rarity on price: evidence from NBA Top Shot

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  • Yeonjoon Lee

    (Quantitative Supervision & Research Group, Federal Reserve Bank of Richmond)

Abstract

I measure the impact of rarity on price. The main challenge is that usually rarity is positively correlated with quality. In addition, sometimes price also affects rarity. To overcome these difficulties, I study an NBA digital collectibles market called NBA Top Shot where those concerns are well addressed. By analyzing novel and rich data sets, I find that the elasticity of price with respect to circulation (reverse rarity) is −0.74 on average. I also find that less popular products are more elastic than more popular products are.

Suggested Citation

  • Yeonjoon Lee, 2022. "Measuring the impact of rarity on price: evidence from NBA Top Shot," Marketing Letters, Springer, vol. 33(3), pages 485-498, September.
    • Handle: RePEc:kap:mktlet:v:33:y:2022:i:3:d:10.1007_s11002-022-09636-5
    DOI: 10.1007/s11002-022-09636-5
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    References listed on IDEAS

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    1. Bodvarsson, Orn B & Brastow, Raymond T, 1998. "Do Employers Pay for Consistent Performance?: Evidence from the NBA," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 145-160, January.
    2. Subramanian Balachander & Yan Liu & Axel Stock, 2009. "An Empirical Analysis of Scarcity Strategies in the Automobile Industry," Management Science, INFORMS, vol. 55(10), pages 1623-1637, October.
    3. Örn B. Bodvarsson & Raymond T. Brastow, 1999. "A Test Of Employer Discrimination In The Nba," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 243-255, April.
    4. Samuel Cameron & Hendrik Sonnabend, 2020. "Pricing the Groove: hedonic equation estimates for rare vinyl records," Applied Economics, Taylor & Francis Journals, vol. 52(50), pages 5516-5530, October.
    5. Koford, Kenneth & Tschoegl, Adrian E., 1998. "The market value of rarity," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 445-457, March.
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    Cited by:

    1. Ghazi, Soroush & Schneider, Mark, 2024. "Market value of rarity: A theory of fair value and evidence from rare baseball cards," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 318-339.
    2. Dulani Jayasuriya & Alexandra Sims, 2023. "Not So New Kid on the Block: Accounting and Valuation Aspects of Non-Fungible Tokens (NFTs)," JRFM, MDPI, vol. 16(11), pages 1-24, October.

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