Does rarity help or hurt value?

[BobC]

Originally Posted by Leon

No, not really. It can be a super rare card (low supply,) and if there's not much demand, the value won't be as high as others in more demand. It's common sense actually.

Actually, you and Glyn are both right to some extent, as it depends greatly on the type of item you are looking to explain the pricing of. When talking about an item that is somewhat of a commodity/constant resource and basically used/consumed once, Glyn's definition of the classic supply and demand marketplace formula is more apropos. That is where the business/economics basis of the supply versus demand dynamic most appropriately comes in to explain the variances in pricing/costs of some items, like with say oil/gasoline prices. There is a fairly universal demand for gas/oil, and at least for now, a perceived unlimited supply to serve that demand. But in this case, both the supply AND demand factors can, and do, change over time, and thus effect the price paid.

As the supply of gas/oil goes up or down, the price will generally conversely fluctuate as well, less supply of gas available equals higher prices, and vice versa. Like back when OPEC really controlled the production/supply of oil and restricted it, and gas prices surged as a direct result in the face of a somewhat constant worldwide demand. But earlier during the pandemic, when a lot of the world was in lockdown, the overall demand for gas/oil plunged because no one was driving anywhere, in which case the price of gas/oil reacted directly in conjunction with that change in demand, and went way down. So bear that in mind, demand works to directly affect prices, whereas supply works to conversely affect prices, in most normal market situations. But by no means are they the sole factors in determining price for commodities and everything else in the marketplace.

However, cards/collectibles are not really the type of normal commodity/item to which the classic supply and demand formula was truly meant to describe how the market works. The one huge difference is that in the case of cards/collectibles, the supply side of the equation is pretty much fixed, and not ever really going to change. In which case, it is really only the demand side of the formula that is subject to change, and thus is often perceived as the only factor that truly matters in determining price. So as Leon alluded to, in the case of a specific collectible item with a somewhat known and forever limited supply, the demand side of the equation is likely going to dominate the pricing of such items.

Still, there are some rare instances though where the supply side of the formula may still come into play. Just think back to the E98 cards and the impact to the market for them from the Black Swamp find. Clearly the pricing of those E98 cards came down to some extent overall, and have now somewhat equalized out after all the time since the find was first made public. And just think of how much money that family may have left on the table by coming out with that find all at once. Quite honestly, had it been me that found those E98 cards, and been the sole heir, I would have milked them for all they were worth. I would have started with only sending in a few of the lesser condition cards to multiple TPGs for grading, and/or contacted different AHs to assist in the selling/grading of such cards, so as to keep the knowledge that these new to the market E98 cards were all coming into the hobby from a sole source as long as possible. Having over 20 different relatives all owning a piece of that inheritance, and many wanting their money now and not later, made that an impossibility though. And thus, after the initial hype and publicity of the find died down, so did a lot of what would have been initially expected to be the new ongoing demand/prices for those cards, based on what E98 cards in then available grades were selling for before the find became public knowledge. Think of it this way, would you as a collector be more inclined to pay a premium today for an E98 card being slabbed and designated as from the Black Swamp find, as you might have been at the height of the find's hype and publicity just after it first became known?

There are many, many variables that ultimately factor in to determining what something ends up selling for, but maybe the most important isn't supply or demand after all. Isn't it really the type/class of person attracted to an item, and how rich and well off those people are? You can have two different 1/1 cards, with exactly two different people that want each card. But if the one card is desired by two different well off multi-millionaires, and the other desired by two different working class guys with families, kids, mortgages, and other debts, guess which card will likely sell for a lot more than the other, despite there being the exact same supply and demand for each card? And this is where hype, advertising, desirability, and all the other non-tangible factors come into play. For example, one of the factors that helped propel the value of the top graded PSA Wagner T206 card is that it was once owned by Wayne Gretzky (Does anyone even ever mention it was co-owned by McNall?) That kind of hype and association amongst famous and well off people is a huge factor in determining an item's worth in many other people's eyes, and whether or not people with greater financial means want to own it and get in on the action. Of course after all the Mastro stuff about that card came out in court, that particular Wagner is now even more infamous than just famous, and probably all the more desirable (ie: valuable) to those with the desire and means to potentially buy, and thus be able to brag and show off, such a well-known card. Meanwhile, how many famous and well-to-do people care, or even know of the existence, of there being a mint E98 card of Wagner?

Supply AND demand will always play some role in the determination of something's price, maybe just not always to the extent we might think otherwise.