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Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries

  • Luuk Van Kempen

    (CentER and Department of Economics, Tilburg University, The Netherlands)

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    Poor consumers in the developing world use a variety of status signalling devices that rely on deception of the observer. A frequently used deceptive strategy is the consumption of counterfeit instead of original status-intensive goods, mainly cheap copies of expensive brand-name goods from developed countries. The choice for such deceptive modes of conspicuous consumption is analysed within a product characteristics approach as developed by Lancaster and compared with non-deceptive alternatives. Under the controversial assumption that the poor care about status, it is shown that counterfeit goods embody a more 'appropriate' combination of status and functionality than original goods. It appears that the consumption of counterfeits potentially enhances the welfare of low-income consumers, depending on the extent to which the eye of the relevant beholder is effectively deceived. Copyright © 2003 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/jid.973
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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

    Volume (Year): 15 (2003)
    Issue (Month): 2 ()
    Pages: 157-177

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    Handle: RePEc:wly:jintdv:v:15:y:2003:i:2:p:157-177
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    1. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
    2. Higgins, Richard S & Rubin, Paul H, 1986. "Counterfeit Goods," Journal of Law and Economics, University of Chicago Press, vol. 29(2), pages 211-30, October.
    3. James, Jeffrey, 1987. "Positional goods, conspicuous consumption and the international demonstration effect reconsidered," World Development, Elsevier, vol. 15(4), pages 449-462, April.
    4. Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001. "Status Effects and Negative Utility Growth," Economic Journal, Royal Economic Society, vol. 111(473), pages 642-65, July.
    5. Grossman, Gene M & Shapiro, Carl, 1988. "Foreign Counterfeiting of Status Goods," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 79-100, February.
    6. James, M.J., 2000. "Do consumers in developing countries gain or lose from globalization?," Other publications TiSEM e7f8ff07-cc97-4431-a52c-e, Tilburg University, School of Economics and Management.
    7. Congleton, Roger D., 1989. "Efficient status seeking: Externalities, and the evolution of status games," Journal of Economic Behavior & Organization, Elsevier, vol. 11(2), pages 175-190, March.
    8. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    9. Wells, John, 1977. "The Diffusion of Durables in Brazil and Its Implications for Recent Controversies Concerning Brazilian Development," Cambridge Journal of Economics, Oxford University Press, vol. 1(3), pages 259-79, September.
    10. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
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