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Pricing Superior Goods: Utility Generated By Scarcity

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  • Shuntian Yao
  • Ke Li

Abstract

. We discuss the pricing of a superior good based on its ‘signalling value’. Our model and analysis offer a different explanation of why in China and some other Asian countries the prices of luxury goods are extremely expensive when they are first marketed, then fall dramatically and discontinuously afterwards, when marginal costs decline to below the critical point and the goods become more popular.

Suggested Citation

  • Shuntian Yao & Ke Li, 2005. "Pricing Superior Goods: Utility Generated By Scarcity," Pacific Economic Review, Wiley Blackwell, vol. 10(4), pages 529-538, December.
    • Handle: RePEc:bla:pacecr:v:10:y:2005:i:4:p:529-538
    DOI: 10.1111/j.1468-0106.2005.00290.x
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    Cited by:

    1. Vitaly Pruzhansky, 2014. "Luxury goods, vertical restraints and internet sales," European Journal of Law and Economics, Springer, vol. 38(2), pages 227-246, October.
    2. Alexandra Giuliana ANDRONIC, 2021. "Consumer Behaviour In Purchasing Luxury Goods During Economic Crises," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 25, pages 9-14, May.

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