Veblen Good
Candlefocus EditorVeblen goods are usually products that are considered to be of high quality and are perceived as luxury items. These types of goods include expensive cars, designer clothing, upscale jewelry, and other status symbols. As the price of these items increases, this signals to the consumer that it is a high-quality product and that other people are willing to pay for it. As a result, there is an increased demand for the item, which increases its price even further, creating the upward-sloping demand curve.
In addition to appealing to affluent consumers, Veblen goods also appeal to consumers’ needs to be seen as having the latest, most fashionable product. As the cost of these goods rises, the consumer is reassured that they will have a current and fashionable item. This concept is rooted in the idea of conspicuous consumption, where people purchase the most expensive and latest item to signal their social status to others.
Veblen goods are widely available and can be found in many markets. Many of the world’s most exclusive fashion houses offer Veblen goods that are in high demand from affluent customers. Luxury car companies also offer Veblen goods, and high-end electronics and jewellery are two of the most common Veblen goods.
In addition to the unique demand model, Veblen goods possess another unique attribute – they do not fall subject to market trends or expected obsolescence due to changing consumer tastes. This is due to the fact that Veblen goods are highly coveted, and as a result, their demand remains constant, regardless of changing consumer preferences. As a result, these high-end products remain valuable and retain their resale value, and they often appreciate in value over time.
Overall, Veblen goods are specialized products that are in high demand due to their high price and perceived quality. The demand for these goods increases as prices increase, creating an upward-sloping demand curve. These products appeal to affluent consumers and provide them with a sense of social status. Additionally, Veblen goods have the additional benefits of not being affected by changing consumer tastes and appreciating in value over time.