Definition
A market phenomenon where the price differential between adjacent product or credit tiers narrows due to shifts in perceived marginal utility, liquidity constraints, or asymmetric demand concentration.
In Panel Profits
In certified comic markets, grade compression occurs when the valuation spread between adjacent mid-grade condition tiers (e.g. 6.0 through 8.5) contracts into a flat trading range, while pristine top-tier certified census copies (CGC 9.8 and higher) pull away into exponential price multipliers due to physical attrition.
Comic-market example
For Bronze Age keys like The Incredible Hulk #181, copies graded 7.0 through 8.5 frequently exhibit grade compression with relatively narrow dollar steps, whereas the step from 9.6 to 9.8 commands an exponential 3x-5x premium.
Calculation
Grade Tier Spread Delta = (FMV[grade_high] - FMV[grade_low]) / FMV[grade_low]
Common mistakes
Non-9.8 holdings must never receive a 9.8 valuation. Never assume grade steps are linearly distributed.