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Continuous Market Growth Beyond Functional Satiation. Time-Series Analyses of U.S. Footwear Consumption, 1955-2002

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  • A. Frenzel Baudisch

Abstract

Market growth is driven by product innovation. Beyond functional satiation the marginal utility of product performance and variety decreases. We argue that social comparisons underlying innovation diffusion results in consumer motivations for upward assimilation toward the behavior of better performing others, even beyond functional requirements. We distinguish consumption growth patterns driven by functional vs. assimilating motivations. These patterns are tested by time-series analyses of U.S. Footwear consumption between 1955 and 2002. The acceleration of market growth since the 1970s is statistically explained by changes in price, cross-price elasticity, and the increasing demand for innovations, according to our theoretical account of consumption motivations beyond functional satiation.

Suggested Citation

  • A. Frenzel Baudisch, 2006. "Continuous Market Growth Beyond Functional Satiation. Time-Series Analyses of U.S. Footwear Consumption, 1955-2002," Papers on Economics and Evolution 2006-03, Philipps University Marburg, Department of Geography.
  • Handle: RePEc:esi:evopap:2006-03
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    References listed on IDEAS

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    6. Alexander Frenzel Baudisch, 2006. "Functional Demand Satiation and Industrial Dynamcis - The Emergence of the Global Value Chain for the U.S. Footwear Industry," DRUID Working Papers 06-03, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
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    Cited by:

    1. Kaus, Wolfhard, 2013. "Beyond Engel's law - A cross-country analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 118-134.
    2. Andreas Chai, 2017. "Tackling Keynes’ question: a look back on 15 years of Learning To Consume," Journal of Evolutionary Economics, Springer, vol. 27(2), pages 251-271, April.
    3. Andreas Chai & Alessio Moneta, 2012. "Back to Engel? Some evidence for the hierarchy of needs," Journal of Evolutionary Economics, Springer, vol. 22(4), pages 649-676, September.

    More about this item

    Keywords

    Product Innovation; Innovation Diffusion; Consumption Growth; Social Comparison; Time-Series Analysis;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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