For some goods demand rises with price, because the price itself is the signal being bought.
Veblen's 1899 analysis. It is distinct from the bandwagon effect, where popularity rather than price is the signal, and both were named by Leibenstein in 1950.
In practice
- A handbag whose price rise is announced sells more, and sells less again when it is discounted.
- A wine that sells poorly at £30 sells well at £70, and the buyers are not mistaken about what they are buying.
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys