![]() Today, with digital tools and digital distribution, that cost is almost zero. In the past, distributing a new music album would have required millions of dollars of investment in recording, manufacturing and distribution. This can be incredibly disruptive to an economy. Digital products do not rely on scarce resources. The economy of abundance is almost always present in the digital world-digital products and content are easy and cheap to copy, store, and transfer to millions. ![]() Unlike the economy of scarcity, the economy of abundance is built on the availability of near unlimited resources. The Economy of AbundanceĪbundance refers to having ample resources. Scarcity keeps prices high and helps drive profitability. Historically, most organizations have operated within the economy of scarcity, relying on limited resources to create products and meet consumer demand. This is why marketing campaigns often try to create artificial scarcity for a particular product in order to increase demand. Equally, if the supply is large or seemingly unlimited, the perceived value tends to fall. If the supply is low and demand is high, the perceived value (and product price) will tend to rise. In economic terms, the scarcity principle explains the relationship between perceived value, supply and demand. This poses unique challenges for organizations that rely on scarce resources like water or skilled labor. There is a mismatch between the desired supply and the actual supply. If a resource is scarce, but demand is high, not everyone can get what they want. The economic theory of scarcity refers to a mismatch between limited resources and consumer demand. The economy of scarcity and the economy of abundance are important concepts when discussing this transformation. Industries and institutions are interested in transformation not only for technological advancement but also for digitalization’s economic impact. Differences Between the Economies of Scarcity and Abundance Understanding economic scarcity versus abundance in digital transformation will help business leaders, engineers, and other stakeholders unlock new innovation possibilities. This economic growth comes with a set of advantages and disadvantages that all involved parties need to be aware of. The shift from the economy of atoms to the economy of bits is disrupting many organizations. ![]() Economic Scarcity versus Abundance in Digital Transformation
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