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Collectors and Buyers:

Enjoy more trust and less fraud with verification services.

May find cards more expensive, making it harder for casual buyers to participate.

Feel more confident investing in verified cards.

Card Producers (Big and Small):

Large producers benefit from improved trust in their products.

Smaller producers struggle with higher costs, making it harder to compete.

Verified cards help all producers prove authenticity and fight fraud.

Verification Services:

Demand for their services increases as fraud grows.

Must keep services affordable while maintaining quality.

Play a key role in shaping the market and trust.

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Disadvantages of Verification Policies: 

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Disadvantages of Verification Policies: 

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Higher costs for producers and consumers.

Reduced accessibility for casual collectors.

Risk of over-regulation potentially stifling innovation and competition.

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Scarcity and Equilibrium

Artificial scarcity is achieved through trading card companies like Topps and Pokemon through limited editions or exclusive releases, ensuring high demand.

Supply and Demand

Now there is more demand for authenticated cards (e.g., PSA-graded) which shifts the demand curve rightward, while verification costs push the supply curve leftward, impacting the market's equilibrium.

Market Efficiency and Failures

Market efficiency, especially in the trading card market, improves when trust is restored and there are these types of systems, but at the cost of more expenses.

Fraudulent trading cards allow for market failures by decreasing trust and requiring costly verification processes ( PSA services).

Scarcity Drives Value

The Pittsburgh Pirates’ offer of 30 years of season tickets for a rookie card of their player shows how limited supply creates immense economic value. And showcases of players’ cards being sold for millions.

Redistribution

High costs of rare cards exclude younger or casual collectors, showcasing how speculative buying and inflated prices create inequality within the hobby

Impacts on Stakeholders in the Trading Card Market:

Large Producers: Can deal with higher verification costs, and continue to have a large market share

Small Producers: Struggle to compete due to limited resources, reducing diversity in trading card offerings.

Applications and policy issues

A notable positive externality is the boost for local businesses like smaller card shops

on the negative side, speculative buying and limited production would inflate card prices

The rise in the value of rare cards like vintage high-grade sports cards has priced out the regular consumer, widening inequality within the hobby.

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Rising number of fraudulent cards, increasing overall demand for authentication and verification services.

High verification costs raise rices, which provides benefit to high level collectors, and drives casual buyers out of the market.

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Positive (Facts):

Verification reduces fraud and increases trust in the market.

Scarcity pricing is strengthened with verified authenticity.

Higher costs may block smaller producers and casual buyers.

Normative (Values):

Policies should ensure fairness and accessibility for everyone.

Verification should align with trust and inclusivity values.

Efforts must reduce inequities affecting smaller players.

Blended View:

Balancing fairness and efficiency is important to keep the market strong.

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The standard equilibrium would assume that the market naturally adjust to get a balance of supply and demand. Higher verification costs introduces an imbalance that would shift the supply curves upwards most likely leading to higher equilibrium prices and reduced quantity demanded.

The standard model also assumes everyone has the same access. With more verification policies and increased costs certain consumers who are more price sensitive are cut out of the market. It divides this market into high value resellers and those who can no longer afford to participate.

Large producers can afford higher costs more easily than smaller ones. This creates barriers to entry that would naturally distort the equilibrium, as the big producers now have some market power.

The standard model does not explicitly account for factors like trust that would be increased. Increased trust could potentially increase demand for certain buyers who have the capital to afford the increased costs.

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Efficiency:

Fraud is reduced, and market transparency is improved.

High costs may discourage casual buyers and smaller players.

Tiered systems could make verification more efficient for all.

Equity:

Larger companies benefit more, leaving smaller producers at a disadvantage.

Policies must ensure smaller players have fair access to verification.

Shared costs or subsidies could help level the playing field.

Distributional Impacts:

Larger producers may grow stronger, while smaller ones struggle.

Making verification more accessible can help balance the market.

Policies need to focus on helping smaller players compete fairly.

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Support for Smaller Producers:

Offer subsidies to cover verification costs for smaller producers.

Provide incentives for adopting efficient technologies like blockchain.

Share costs through partnerships to make policies easier to implement.

Flexible Verification Options:

Create basic and premium verification services to fit different needs.

Make affordable options for casual buyers while keeping premium services high-quality.

Use fair pricing to ensure inclusivity without lowering standards.

Awareness and Transparency:

Educate people on why verification matters and how it works.

Make verification processes clear to build trust.

Regularly review policies to fix problems and ensure fairness.

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The New Chicagoan article ties into class economic concepts by showing the principles of supply and demand, particularly how scarcity influences market equilibrium. It also talks about artificial scarcity created by trading card companies through limited editions, driving up demand and prices.

The article also addresses market inefficiencies, showing how fraud challenges trust and creates the need for verification services like PSA, which increases costs but improves efficiency.

Additionally, it shows the positive and negative externalities, where local businesses benefit from the hobby, but inflated prices exclude casual collectors, reflecting broader issues of economic disparity.

Lastly, it ties into technological advancements like blockchain, which reduce uncertainty but raise costs, showcasing the trade-offs in market innovation.

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The trading card industry transformed from niche collectibles to mainstream assets because of advancements in technology and drastically increasing market demand. (thenewchicagoan.com)

Key economic principles come into play, including supply, demand, and scarcity, which companies leverage as artificial scarcity to drive up value.

Rare rookie cards and Pokémon cards resell for several thousands, even millions of dollars. The highest card sold was a 1952 Mickey Mantle card, which sold at auction for $5.2 million.

The biggest challenge in the market is fraud. The assurance of authenticity through solutions such as PSA grading or blockchain authentication means additional cost. psacard.com

While the industry boosts local businesses and trade conventions, speculative buying and inflated prices often exclude casual collectors, highlighting broader economic disparities. (thepennyhoarder.com)

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Covid Changed the Trading Card Market. Where is it now? — The New Chicagoan

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The trading card market exploded early in the pandemic as people capitalized on their nostalgia and sought alternative forms of investment — safe harbors that would keep their assets safe and appreciate over time.

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In the trading card market more and more cards are being caught for fraud, this causes a need for verification of trading cards within the market. What are the economic implications of this?

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The new supply and demand curves due to the increase in verification on cards will result in a higher equilibrium price as there will be more consumer confidence. The equilibrium quantity may also increase (only if demand rises a lot) or decrease (if higher costs compare to demand growth). The exact changes though depend on the elasticity of demand and supply of the card market

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Regardless, the trading card industry has taken steps to reduce fraud and drive growth in the market, which have proven beneficial since the 90’s, where the market notoriously crashed due to…

Overproduction as a result of high demand

Little to no variation in card type, design, and objective rarity

Underdeveloped verification practices

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Since then, measures have been taken by companies to mitigate the issues of scarcity and overproduction

Controlled print runs

Special editions, variants, and autographed/hologram cards

Just like the 1990’s, trading card companies still face problems related to fraud an consumer trust, with casual buyers being the most affected by these inefficiencies

Modern technology has lessened the effects of fraud

The industry and market learned the dangers of overproduction of cards, lack of scarcity, variation, and verification, and made notable improvements that have carried it forward to where it is today

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With the rise of online shopping, we are seeing growing numbers of counterfeit shoes being sold.

Similarly, authentication and verification measures have been developed, which raise costs for both sellers and buyers

This drives out casual collectors

No standardized procedures for verifying or grading shoes

This is a big problem, as everyone wears shoes, but effects people differently; some may never even know

Nearly 1 in 4 people have received a counterfeit shoe in their lifetime

Drives demand for name brand shoes down, especially when counterfeit shoes are undetectable.

https://www.forbes.com/sites/shelleykohan/2020/07/17/with-online-sales-up-30-fraudsters-are-taking-advantage/