Conspicuous Consumption and the Existence of Upward Sloping Demand Curves
The paper develops a theoretical framework for studying conspicuous consumption. This is modeled as a device that signals the consumer's social status. Status is some function of the individual's rank in the wealth hierarchy. This approach makes it possible to distinguish between snob and conformist consumer behavior. It is shown that when behavior is conformist, the market demand curve for the good can exhibit a positive slope. A number of unconventional implications for public policy are then derived concerning taxation, monopoly power, and the voluntary provision of public goods.
|Date of creation:||Dec 1994|
|Date of revision:|
|Contact details of provider:|| Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany|
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References listed on IDEAS
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- Barzel, Y. & Suen, W., 1991.
"The Demand Curves for Giffen Goods are Downward Sloping,"
Discussion Papers in Economics at the University of Washington
91-18, Department of Economics at the University of Washington.
- Barzel, Yoram & Suen, Wing, 1992. "The Demand Curves for Giffen Goods Are Downward Sloping," Economic Journal, Royal Economic Society, vol. 102(413), pages 896-905, July.
- Barzel, Y. & Suen, W., 1991. "The Demand Curves for Giffen Goods are Downward Sloping," Working Papers 91-18, University of Washington, Department of Economics.
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University of Chicago - George G. Stigler Center for Study of Economy and State
67, Chicago - Center for Study of Economy and State.
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- Gerhard Orosel, 1986. "Tentative notes on prestige seeking and pareto-efficiency," Journal of Economics, Springer, vol. 5(1), pages 169-194, December.
- 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.
- Hollander, Heinz, 1990. "A Social Exchange Approach to Voluntary Cooperation," American Economic Review, American Economic Association, vol. 80(5), pages 1157-67, December.
- Coelho, Philip R P & McClure, James E, 1993. "Toward an Economic Theory of Fashion," Economic Inquiry, Western Economic Association International, vol. 31(4), pages 595-608, October.
- Paul R. Milgrom & John Roberts, 1984.
"Price and Advertising Signals of Product Quality,"
Cowles Foundation Discussion Papers
709, Cowles Foundation for Research in Economics, Yale University.
- Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-71, September.
- Ng, Yew-Kwang, 1987. "Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values," American Economic Review, American Economic Association, vol. 77(1), pages 186-91, March.
- Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
- Konrad, Kai A., 1992. "Wealth seeking reconsidered," Journal of Economic Behavior & Organization, Elsevier, vol. 18(2), pages 215-227, July.
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