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Some Anomalies Arising from Bandwagons that Impart Upward Sloping Segments to Market Demand

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Author Info
Micha Gisser (University of New Mexico)
James E. McClure () (Ball State University)
Giray Okten () (Florida State University)
Gary Santoni () (Ball State University)

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Abstract

In Gary Becker’s (1991) theory of bandwagon effects, a portion of market demand is positively sloped. In this, he ignores Harvey Leibenstein’s (1950) hypothesis that market demands for bandwagon goods are everywhere negatively sloped (stemming from scarcity imposed constraints). A substantial literature now invokes Becker’s bandwagon, also ignoring Leibenstein. Two anomalies attend Becker’s bandwagon demand when it slopes upward: 1) straightforward parameterizations are inconsistent with the economic requirement that quantities demanded be non-negative; 2) regardless of parameterization, the comparative statics of Becker’s demand carry unworldly implications.

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Publisher Info
Article provided by Atlas Economic Research Foundation in its journal Econ Journal Watch.

Volume (Year): 6 (2009)
Issue (Month): 1 (January)
Pages: 21-34
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Handle: RePEc:ejw:volone:200921-34

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Related research
Keywords: bandwagon effect; law of demand;

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Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D40 - Microeconomics - - Market Structure and Pricing - - - General
D62 - Microeconomics - - Welfare Economics - - - Externalities

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  1. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March. [Downloadable!] (restricted)
  3. Wolfgang Pesendorfer, 1993. "Design Innovation and Fashion Cycles," Discussion Papers 1049, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
  4. Karni, Edi & Levin, Dan, 1994. "Social Attributes and Strategic Equilibrium: A Restaurant Pricing Game," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 822-40, August. [Downloadable!] (restricted)
  5. Becker, Gary S, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1109-16, October. [Downloadable!] (restricted)
    Other versions:
  6. Biddle, Jeff, 1991. "A Bandwagon Effect in Personalized License Plates?," Economic Inquiry, Oxford University Press, vol. 29(2), pages 375-88, April.
  7. Corneo, Giacomo & Jeanne, Olivier, 1997. "Conspicuous consumption, snobbism and conformism," Journal of Public Economics, Elsevier, vol. 66(1), pages 55-71, October. [Downloadable!] (restricted)
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