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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

    (Department of Economics, University of New Mexico)

  • James E. McClure

    ()
    (Department of Economics, Ball State University)

  • Giray Ökten

    ()
    (Department of Mathematics, Florida State University)

  • Gary Santoni

    ()
    (Department of Economics, Ball State University)

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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File URL: http://econfac.iweb.bsu.edu/research/workingpapers/bsuecwp200804gisser.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200804.

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Length: 17 pages
Date of creation: Dec 2008
Date of revision: Dec 2008
Handle: RePEc:bsu:wpaper:200804

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Keywords: Bandwagon Effect; Law of Demand;

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  1. Pesendorfer, Wolfgang, 1995. "Design Innovation and Fashion Cycles," American Economic Review, American Economic Association, vol. 85(4), pages 771-92, September.
  2. 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.
  3. 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.
  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.
  5. Corneo, Giacomo & Jeanne, Olivier, 1997. "Conspicuous consumption, snobbism and conformism," Journal of Public Economics, Elsevier, vol. 66(1), pages 55-71, October.
  6. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  7. Biddle, Jeff, 1991. "A Bandwagon Effect in Personalized License Plates?," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 375-88, April.
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Cited by:
  1. Finn Christensen, 2014. "Demand with Consumption Externalities," Working Papers 2014-02, Towson University, Department of Economics, revised Apr 2014.

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