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Social division in the market: conspicuous consumption with nationalist feelings

Author

Listed:
  • Ornella Tarola

    (University of Rome, Italy)

  • Skerdilajda Zanaj

    (CREA, Université du Luxembourg)

Abstract

In this paper, we explore the effects of conspicuous goods as means of social division between native citizens and migrants. We push forward the hypothesis that choosing a particular good can confer a sense of place. We introduce this idea in an international vertical differentiation market with two variants and two social groups: migrants and natives. Natives are narrow- minded since they attribute a positive social value to the variant that complies with their own consumption culture. Migrants are open-minded. When consumers belonging to different groups meet, they exchange information about their consumption habits and consumption well-being that reveals their consumption culture: narrow-minded versus open-minded. Consequently, after meeting, some consumers may change beliefs (narrow-minded to open-minded or vice versa) and consumption choices. Using a dynamic model, we fully elucidate the steady state equilibrium and highlight the impact of nationalism on migrant integration.

Suggested Citation

  • Ornella Tarola & Skerdilajda Zanaj, 2019. "Social division in the market: conspicuous consumption with nationalist feelings," DEM Discussion Paper Series 19-12, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:19-12
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    References listed on IDEAS

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    More about this item

    Keywords

    relative preferences; vertical differentiation; nationalistic consumption; dynamic duopoly.;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • F18 - International Economics - - Trade - - - Trade and Environment
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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