Veblen effect

Veblen effect

a theory of CONSUMPTION that suggests that consumers may have an UPWARD-SLOPING DEMAND CURVE as opposed to a downward-sloping DEMAND CURVE because they practice CONSPICUOUS CONSUMPTION. A downward-sloping demand curve implies that the quantity demanded of a particular good varies inversely with its price (as price increases, quantity demanded falls). The Veblen effect suggests that quantity demanded of a particular good varies directly with a change in price (as price increases, demand increases). See also VEBLEN, INCOME EFFECT, ENGELS LAW.
References in periodicals archive ?
The Veblen effect is when consumers perceive higher-priced goods to be worth more, simply because they cost more.
The Veblen effect may indeed be empirically significant in some luxury good markets (see Creedy and Slottje, 1991, and Heffetz, 2004).
By the Veblen effect we refer to the phenomenon of conspicuous consumption; to the extent to which the demand for a consumer's good is increased because it bears a higher rather than a lower price.
The Veblen effect is why a T-shirt sold at Sears costs less than the same T-shirt at the Gap, which costs less than the same T-shirt at Hugo Boss, and so forth.
The snob effect is the tendency for people to desire an item for its exclusivity, and the Veblen effect is the tendency for people to desire an item for its high price tag.
If a Veblen effect exists, the price that others perceive a buyer to have paid for the good enhances the buyer's marginal valuation.
Bandwagon, snob, and Veblen effects in the theory of consumers demand", Quarterly Journal of Economics 64, 2, 1950, pp.
41) Harvey Leibenstein, Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand, 64 Q.
Leibenstein (1950) further refined the analysis with his concepts of bandwagon, snob, and Veblen effects.
Returning to Leibenstein's distinction between Veblen effects and snob effects, see supra text accompanying notes 170-72, Harrison argues that there is no economic basis for assuming the underproduction of goods that supply a demand for wealth signaling nor for goods that depend on scarcity (although in the latter case, Harrison models one scenario in which there may be a net consumer surplus from subsidizing this scarcity).
1950) "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, May, repr.
Bandwagon, snobs, and Veblen effects for the theory of consumer's demand.