Design Innovation and Fashion Cycles
A model of fashion cycles is developed in which designs are used as a signaling device in a 'dating game.' A monopolist periodically creates a new design. Over time the price of the design falls as it spreads across the population. Once sufficiently many consumers own the design it is profitable to create a new design and thereby render the old design obsolete. This paper gives conditions under which all consumers would be better-off by banning the use of fashion. Competition among designers may lead to less frequent changes in fashion and to higher prices than monopoly. Copyright 1995 by American Economic Association.
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Volume (Year): 85 (1995)
Issue (Month): 4 (September)
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