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

  • A. Frenzel Baudisch

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.

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File URL: ftp://137.248.191.199/RePEc/esi/discussionpapers/2006-03.pdf
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Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2006-03.

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Length: 34 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:esi:evopap:2006-03
Contact details of provider: Postal: Deutschhausstrasse 10, 35032 Marburg
Phone: 064212824257
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Web page: http://www.uni-marburg.de/fb19/
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  1. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
  2. 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.
  3. Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November.
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  8. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  9. Vermeir, Iris & Van Kenhove, Patrick & Hendrickx, Hendrik, 2002. "The influence of need for closure on consumer's choice behaviour," Journal of Economic Psychology, Elsevier, vol. 23(6), pages 703-727, December.
  10. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  11. Ulrich Witt, 2006. "Evolutionary Economics," Papers on Economics and Evolution 2006-05, Philipps University Marburg, Department of Geography.
  12. Abernathy, William J. & Clark, Kim B., 1985. "Innovation: Mapping the winds of creative destruction," Research Policy, Elsevier, vol. 14(1), pages 3-22, February.
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