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What price makes a good a status good? Results from a mating game

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  • Tobias Thomas

Abstract

This contribution provides a game theoretical derivation of market demand for status goods as a function of the level and distribution of income: if (1) the price is sufficiently low, everyone buys the good; if (2) the price is sufficiently high, only the rich buy the good (a status good in a narrow sense). If (3) the price is located in very high or in middle range, demand collapses. Thereby, we explain the critical price from which a status good acts as a distinctive signal. In addition, this approach shows the potential welfare-improving impact of conspicuous consumption. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Tobias Thomas, 2013. "What price makes a good a status good? Results from a mating game," European Journal of Law and Economics, Springer, vol. 36(1), pages 35-55, August.
    • Handle: RePEc:kap:ejlwec:v:36:y:2013:i:1:p:35-55
    DOI: 10.1007/s10657-011-9273-4
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    References listed on IDEAS

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    Cited by:

    1. Bronsert, Anne-Kathrin & Glazer, Amihai & Konrad, Kai A., 2014. "Old Money, the Nouveau Riche and Brunhilde's Marriage Dilemma," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100385, Verein für Socialpolitik / German Economic Association.
    2. Anne-Kathrin Bronsert & Amihai Glazer & Kai A. Konrad, 2014. "Old Money, the Nouveaux Riches and Brunhilde’s Marriage Strategy," Working Papers tax-mpg-rps-2014-15, Max Planck Institute for Tax Law and Public Finance.
    3. Anne-Kathrin Bronsert & Amihai Glazer & Kai A. Konrad, 2017. "Old money, the nouveaux riches and Brunhilde’s marriage strategy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 163-186, January.

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    More about this item

    Keywords

    Conspicuous consumption; Luxury tax; Mating model; Signaling game; Status good; C70; D11; D82;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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