Authored by: Ella Damasco, Andrei Dimaculangan, Jared Go, Marianne Lolarga, Elijah Soriano
At some point, we’ve all experienced collecting something in our lives in relation to things such as stationery, comic books, action figures, and even the bare-billed plastic Sonny Angels. We collect things because we find them interesting or beautiful. They bring us satisfaction, self-expression, and emotional connection.
These collectibles – referred to as items worth more than they were originally sold for because of their rarity and/or popularity – are fun hobbies that originated as early as the Middle Ages, when wealthy Europeans collected art and artifacts, including sculptures and coins. (Chen, 2023; Revel.xyz 2023).
Among the profuse examples of collectibles, Pokemon cards are one of the most prominent. Pokemon cards have been around for over 25 years, built around assembling the strongest deck to win matches, as well as amassing and trading cards within the Pokemon card community.
A card’s value could range from $22,000 to even $5.275 million (Jarvis and Meehan 2020).
As such, some collectors have started to consider Pokemon cards as potential investments. One may ask, why are they worth this much? The value of Pokemon cards is determined by the fundamental principles of supply and demand, as well as miscellaneous or low-level factors that consolidate to make them an alternative mode of investment.
When tackling the rarity of a card, the scarcity principle of economics comes into play. This principle states that a low supply of a good, along with a high demand, will result in the supply not keeping up with the growth in demand. There is an inelastic supply as the number of rare cards barely changes even if the demand for the good increases. If card owners see an increase in prices, only some might be interested in selling which causes a minor, almost unnoticeable, increase in the quantity supplied. The combination of all these factors results in a significant increase in prices where consumers who are more willing to pay continue to inflate the price. However, it must be noted that this principle only applies to older-generation cards that are no longer in production, meaning that there is no new supply being produced.
Graph 1. An increase in demand for a good with an inelastic supply will increase the price of the good
The rarity of a card also depends on the presence of a “grade” from the Professional Sports Authority (PSA).
For instance, a PSA Gem Mint 10 of the Pikachu Illustrator card (“Illustrator CoroCoro Comics Promo”) was sold at the expensive price of $6,000,000 in 2022 (Koepp, 2023). It is said that a total of 41 copies exist, with 27 of them being PSA-graded—definitely causing its price to rise (Day, 2023).
Aside from tackling dynamics on the supply-side, it is imperative to consider the demand-side as well. Pokemon card collectors are primarily driven by nostalgia and the desire to build a unique collection (Bujtas, 2023). In recent years, Pokemon Go became a worldwide phenomenon that caused people to fall in love with the timeless franchise. However, the nostalgic value of old-school trading cards was too difficult to ignore, sustaining the continued appeal of Pokemon cards in the present day (I&T Today, 2021). This stimulates demand for the cards which in turn leads to higher prices.
Another driver of Pokemon card demand can be derived from consumers who “hopped on the bandwagon” after seeing their favorite influencers and celebrities collecting these cards.
In 2020, Logan Paul streamed his unboxing of 1st Edition Base Set Pokémon cards on sStream, where he found a rare 1st Edition Charizard card.
He also promoted the hobby to be a legitimate form of investment, creating the so-called “Logan Paul Effect” and causing prices to skyrocket (Koepp, 2020).
Source: TCGPlayer
Graph 2. Price changes of common Base Set Unlimited Venusaur card
The Logan Paul Effect can be observed in the price changes of the common and inexpensive Base Set Unlimited Venusaur card.
After Logan’s unboxing video, the price increased by 1250% compared to its average $20 price in 2019 (Day, 2023).
One factor that some may take into consideration when tackling this topic is card abilities. When new cards with strong abilities come out, they have the potential to attract more demand from people that want to win games or tournaments. This may lead these cards to a short-term rise in prices. However as newer and better cards come out, older cards may become more irrelevant in the competitive scene. Hence, card abilities may only play a major role in the short-run rather than the long-run.
In conclusion, there are various supply and demand factors that cause fluctuations in the selling price of pokemon cards. These can range from various things such as rarity, condition, and even social media influencers. While these factors have generally led to the rise in prices of Pokemon cards in the long-run, that does not necessarily make them viable alternative investments for everyone though. The field requires more expensive research in order to confirm the sustainability of aforementioned trends.
References
Bujtas, N. (2023, July 14). The Ultimate Guide to Understanding the Economics and Investment Potential of Pokemon Cards. Medium; Medium. https://medium.com/@nandorbujtas/the-ultimate-guide-to-understanding-the-economics-and-investment-potential-of-pokemon-cards-f16416e22232
Chen, J. (2023, January 3). What Is a Collectible? Definition, Investing, Insurance and Types. Investopedia. https://www.investopedia.com/terms/c/collectible.asp
Day, P. (2023, February 27). A short history of Pikachu Illustrator, the most expensive Pokémon card. https://infinite.tcgplayer.com/article/A-Short-History-of-Pikachu-Illustrator-the-Most-Expensive-Pok%C3%A9mon-Card/d26cffe2-6e5f-4720-8519-a6317c11c060/ on October 12, 2023
Day, P. (2023, February 7). Pokémon card prices are still feeling the Logan Paul effect. https://infinite.tcgplayer.com/article/Pok%C3%A9mon-Card-Prices-Are-Still-Feeling-the-Logan-Paul-Effect/60ff88ab-be9c-45b7-aa2b-adc012a7e16f/ on October 19, 2023
I&T Today. (2021, June 7). Why Pokemon Cards Went Crazy During The Pandemic - Innovation & Tech Today. Innovation & Tech Today. https://innotechtoday.com/why-pokemon-cards-went-crazy-during-the-pandemic/
Jarvis, M., & Meehan, A. (2020, October 14). The 18 Most Rare and Expensive Pokémon Cards. Dicebreaker; Dicebreaker. https://www.dicebreaker.com/games/pokemon-trading-card-game/best-games/rare-pokemon-cards
Koepp, B. (2020, November 7). How Logan Paul has impacted Pokemon trading cards. https://www.dexerto.com/pokemon/how-logan-paul-has-impacted-pokemon-trading-cards-1448768/ on October 19, 2023
Koepp, B. (2023, October 6). Top 24 most expensive & rarest Pokemon cards ever sold. https://www.dexerto.com/pokemon/top-5-most-expensive-pokemon-trading-cards-1395031/ on October 12, 2023
Revel.xyz. (2023, April 19). A Brief History of Collectibles - Revelxyz - Medium. Medium; Revelxyz. https://medium.com/revelxyz/a-brief-history-of-collectibles-6c3e51ad44a
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