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

Author

Listed:
  • 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.

Suggested Citation

  • Micha Gisser & James E. McClure & Giray Ökten & Gary Santoni, 2008. "Some Anomalies Arising from Bandwagons that Impart Upward-Sloping Segments to Market Demand," Working Papers 200804, Ball State University, Department of Economics, revised Dec 2008.
    • Handle: RePEc:bsu:wpaper:200804
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    File URL: http://econfac.bsu.edu/research/workingpapers/bsuecwp200804gisser.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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