The positive role of conspicuous consumption
1, conspicuous consumption has a strong pull on the production role. Conspicuous consumption may be called \To meet these rich people's desire for consumption, on the need to produce expensive luxury, it is necessary to creating the conditions of their crazy consumer and the environment.
2, conspicuous consumption is conducive to start the market, stimulating consumption. The expansion of consumer demand will inevitably bring about tremendous business opportunities in which conspicuous consumption is the biggest bright spot. Top Marques Shanghai showcases the top cars, yachts, private planes, jewelry and watches, wines and a variety of luxury villas, golf clubs, private clubs and so on. According to statistics, Top Marques three days received a total of more than 7000 Regal, turnover reached 200 million yuan.
3, conspicuous consumption to increase national revenue, to adjust the proportion of savings and consumption, and a balance of income gap. Conspicuous consumption can upgrade and expansion of related industries, as well as high consumption tax according to law, on the spur economic growth and increasing state tax revenue has a role. And conspicuous consumption can make a relatively well-off sectors of slow accumulation of monetary wealth. Can also be poor and working families to provide more opportunities to make money to balance the income gap.
the negative effects of conspicuous consumption
1, conspicuous consumption to make people values distorted, and even lead to the corruption and degeneration of individual people. When people value their wealth status of elite identity, we must do our best to show off and competition, the purpose and significance of life located in the display constantly to meet the escalating demands. In many corruption cases, some senior officials to show their status and power, and vigorously engaged in conspicuous consumption, and give up the desire to meet the principles and laws, to make money, corruption, until the corruption and degeneration.
2, conspicuous consumption will lead to waste of resources. Contrary to a conserving society and sustainable development strategies. Putting in a lot of capital and consume a large amount of resources to the production of conspicuous goods: in order to parade one's wealth extravagantly, spending irrational waste of consumer consumption could save resources and property. Woguo Resources has restricted the economic development, social production and people's life to meet the basic needs of the resources are difficult to guarantee, and conspicuous consumption of resources, especially scarce resources consumption, the direct impact to create economical society and the implementation of sustainable development strategies .
3, conspicuous consumption to the utility of wealth is not well used and reflected, leading to overall social welfare levels. Conspicuous consumption of luxury goods not only produce a large number of costly. And these consumers Youyi astonishing extravagance and waste into waste will be a luxury. The conditions for people to enjoy not squandered, need not any conditions are met. Waste of wealth only to satisfy the vanity of the rich. This is like a real wealth of low growth and decline in the welfare of society as a whole.
4, conspicuous consumption led to the production-oriented society is unreasonable, is not conducive to achieving the goal of common prosperity. Conspicuous consumption makes a lot of resources and money into for the production of waste. The community to meet the real needs of the people is the lack of resources and financial resources, a large number of anti-poverty project is urgently needed financial support. Therefore, conspicuous consumption and our policy is also contrary to enriching the people.
development of the theory of conspicuous consumption
20 after mid-century, sociology, consumer behavior and marketing scholars drew on the basis of previous research economist, and a large number of methods of introduction of psychology and sociology of conspicuous consumption, particularly is the demand for luxury goods made an extensive and in-depth research. In contrast, the traditional method in this research field of economics no longer has the advantage of slow progress. After 80 years until the 20th century, game theory, information economics method is gradually adopted theory of conspicuous consumption economics ushered in a new stage of development. As mentioned above, as early as 1948, as one of the pioneers of Morgenstern game theory research on consumers aware of the interaction between the need to use game theory. However, his view has not been taken seriously. In fact, Veblen Theory of the \
Frank's pioneering research
Frank (1985) of the first to break the deadlock. In his view, show off effect varies by product type. He merchandise is divided into two categories: One is you can see the tangible goods, such as cars and housing, and other people have to compare similar products greatly affects the value of these goods, that such goods consumption will affect consumers in a social environment in the relative position,
Louis Vuitton Portafogli, it is known as location of goods (positional goods); another is outside the consumer goods can not see, such as savings products and insurance policies, it is called non-location product. Frank's research is to examine how the interpersonal comparison of different types of consumer goods have an impact. Leibenstein Although the detailed study of the interaction between the individual consumer behavior, but the consumer's purchase decision is made independent, Frank is one of the important contributions of the consumers cooperative decision-making situation.
he first used a simple strategy-type game show, in the presence of interpersonal comparison, consumers in the non-cooperative decision-making will lead to a \the location of those who consume more goods and fewer non-location products, reach an overall optimal level of benefits. Thus, Frank proved that three propositions:
(1) If the consumer can work together making their goods to non-location (location of goods) demand is greater than (less than) the consumer demand for independent decision-making;
(2) the utility level of individual consumer decisions in cooperation than non-cooperative decision-making;
(3) If the income increase (decrease), non-cooperative consumption decisions on the budget share of non-positional goods increase (decrease) will be faster (slower) co-consumption decisions.
proposition (1) and proposition (2) in fact shows that co-consumption of non-cooperative policy-making decisions to overcome the \Because more resources will be spent on goods at the location of individual consumers that may help to increase the relative social status, but for other consumers, \show that end, we spend too much in the position of commodity resources.
Frank also simple terms to the (low-income to high income groups) tend to mimic and measure individual ability (wealth and income) the adequacy and effectiveness of information is negatively related. Stable social network to provide more measurement information, and an unstable social environment, measure the information provided by the relatively small, so the latter environment, consumers demand more goods on location, on the demand for non-positional goods less . From the life-cycle perspective, older people, his ability to measure the information more fully, so the elderly on the location of the low demand of goods. Marriage, changes in consumer behavior after marriage also confirms the above conclusion.
on conditions for the existence of Veblen effects
Bagwell and Bernheim (1996) the Veblen effect is defined as \status. They assumed that conspicuous goods and general merchandise exactly the same internal function, the difference is they are given conspicuous color. Two of them designed a four-stage game model:
the first stage, the incumbent firms selected for the display of product quality level and price level;
the second stage, potential competitors to the incumbent vendor information observed, the decision to enter or not;
the third stage, firms observe consumer information, the decision to purchase the number of conspicuous goods,
chanel flap bags, and the remaining resources for the purchase of non-display of merchandise;
the fourth stage, the social circle of life observed consumer behavior, infer the level of his wealth, and give the corresponding social status. The social status of individuals in social life largely depends on his circle of wealth owned by the identification level, but the wealth level is private information, the outside world can not be observed, which makes an individual motivated by conspicuous consumption to fight for an ideal social position. The assumption that commodities are infinitely divisible, so conspicuous consumption Conspicuous can buy expensive goods, it can be a lot cheaper to buy goods, or purchase high quality goods. When high levels of consumer wealth and the wealth of low levels of consumer indifference curves satisfy the Spence Morris separation conditions (Spence-Mirrlees sorting condition), the Veblen effect can not be achieved in equilibrium. Under these conditions, purchase of conspicuous goods greatly diverted for non-conspicuous consumption goods, and there is diminishing marginal rate of substitution of the universal law, so low levels of consumer wealth and high wealth levels of conspicuous consumers competing to buy goods (ie money competition) was higher than the cost of the utility they derive. That being the case, high levels of consumer wealth and no incentive to buy expensive goods in order to distinguish it from a low of conspicuous wealth levels (contrast discrimination). In this condition they can purchase through an increase in the number of low-cost to show off wealth, so narrow the Veblen effect does not appear.
In fact, Ireland (1994) has used a simple model led to this conclusion. However, Bagwell and Bernheim On this basis, further demonstrates the separation can not meet the conditions Spence Morris (two types of consumer indifference curve tangent to) the existence of Veblen effects, and this existence in reality is entirely achievable. In addition, Bagwell and Bernheim has repeatedly stressed on the conspicuous consumption of goods is demand-driven, supply competition in states with specific decision-making no substantive impact on the game results. Therefore, the conspicuous goods (real goods in the luxury brands) the price must be acceptable to the consumer price, as long as the unit of commodity tax does not exceed the difference between price and marginal cost, the price would not affect the luxury tax. However, demand for luxury goods is entirely dependent on Veblen effect, be supported by empirical research.
conspicuous consumption activities on the supply side behavior
Pesendorfer (1995) with duplicate appointments Game (date game) model to explain the constantly updated fashion cycle consumption decisions of consumers how to win the status of an ideal society (through dating the form of communication). The characteristics of the study: on the one hand, introduce a dynamic repeated game; the other hand, research on the supply side more fully. In addition, Pesendorfer assume conspicuous goods (mainly consumer durables) consumption at some point show unity and indivisibility, and Bagwell and Bernheim's infinitely divisible is more realistic than assumptions. Dan Pesendorfer's attention lies in the pursuit of social status, fashion and Xiangdui dynamic interpretation, each phase of the game Zhongmei You right herd, Shi Li to distinguish between equivalent.
Pesendorfer that the purpose of fashion is the man in the social interactions into different categories, hope and a class of \the design of automobiles, durable goods Personal style is a kind of show quality (income, tastes, education, etc.) of the signal, but the quality level of design style selection of the final analysis, achieved through price. If the price is the full high quality and low quality of the people can distinguish between people, because equilibrium is in line with most of high fashion consumer groups.
Bagwell and Bernheim assumes that conspicuous goods (location of goods) and general merchandise exactly the same physical features, this way the production costs of different types of vendors difference was not consciously ignored. Pesendorfer done in this more realistic setting, the fashion style of the design costs of goods (including advertising costs) is a fixed sizes, while the marginal cost of zero copy style. To compensate for design costs, manufacturers need to set a new design style of a high-priced, higher fixed costs, the higher the price, duration (corresponding fashion cycle) longer. Therefore, Pesendorfer that high fashion luxury goods is mainly driven by the supply side, which Bagwell and Bernheim very different concept of demand-side driven. In addition, he also pointed out that the market power of firms or reputation can affect the price level and the fashion cycle length. Of course, the social habits of conspicuous consumption is also very important stimulus. Without this stimulation, fashion design fee can not be compensated for general consumption.
repeated games for each of three phases:
the first stage, producers decide whether to create a new design style and how to price;
the second stage, consumers decide which style to buy, and each style will certainly be consumers;
the third stage, consumers have a particular style of consumption goods, and in accordance with certain rules of access and opportunity for other consumers pairing date (to achieve a particular social status).
in a game the last, each of the consumer (the players) to separate the new phase of game start. In the new one game, each consumer (the players) are not historical information observed. Pesendorfer the pooling equilibrium and the separating equilibrium is defined as the average result (egalitarian) and excellent results (elitist). Achieve excellent results with two conditions: First, high levels of the measure of dating is much higher than the low quality of the class (the conditions set by direct implication in Pesendorfer utility function) and directly reflects the difference between people of different quality; The other is the market power of producers to ensure adequate fashion cycle will not be too short, that is, the price of fashion is not reduced in a relatively short period of time. This shows that the Veblen effect is the result of the interaction of supply and demand sides.
subgame perfect Markov equilibrium is a weak coordination equilibrium (weak Markov coordination equilibrium). In this equilibrium, the fashion cycle again and again, forever. Pesendorfer also believes that conspicuous consumption is a waste, to the welfare losses, if not fashion and fashion and the pursuit of social status, all consumers will benefit; clear social structure will help to reduce the motivation of the display signal This is consistent with the idea that he and Frank.
Corneo and Jeanne (1997a) further discussed the behavior of the supply side, they understand the conspicuous consumption and even social norms as social practice, in order to Akerlof and Romer on the social customs (norms) economic theory, research Conspicuous consumption in the process of supply side effects on the demand side. But they denied that social norms are established by usage, and conspicuous consumption as a social norm can be created companies. This creation is similar to long-term investment, firms in the cross of the drive to maximize profits under the incentive for such investment. Corneo and Jeanne followed Leibenstein's bandwagon effect and the snob effect, verification of the conditions under which suppliers have an incentive to create a bandwagon effect and the snob effect of such spending habits. Although their research highlights the supply side in the process of conspicuous consumption effect, but in fact nothing new, because this area already flooded with marketing, advertising literature, they just were described in economics.
on the Veblen effect in the new interpretation of the mechanism
Corneo and Jeanne (1997b) with a new perspective to explain the formation mechanism of Veblen effects. They also assume that the indivisible nature of conspicuous goods, followed the Leibenstein's classification, and the bandwagon effect as \Valenti's \Therefore, they do not separate Leibenstein the so-called Veblen effect, but rather resides on the Veblen effect of being the first two effects. In their view, bandwagon effect, and snobbish effect produced depends on the relative income of social norms to determine how social status, consumer goods on the conspicuous consumption decisions based on the increased social status and non-conspicuous consumption goods based trade-off loss on.
Corneo and Jeanne's innovation is that they made conspicuous consumer goods consumer motivation is the pursuit of conspicuous signal the value of goods (signaling value), but the signal value of the herd and the Snobs are different: Buy a conspicuous product of more people, the products of the herd the higher the value of those signals, but the signal value of the Snobs lower; the other hand, the fewer the number of purchase, the product of the herd's signals, the lower the value of , while the value of the snobbery of those higher signals. The key variable is the number of consumers. Conspicuous consumption of goods as consumer motivation is the pursuit of their signal value, so prices can only increase the signal value of goods, Veblen effects will play a role. Attention to price only previous researchers, such as Leibenstein the Veblen effect is described as a tilt to the upper right corner the market demand curve. This is where the difference is: What Veblen effect is to produce a commodity in the market, or produce in one (or more) among consumer groups. Because prices in the market is generally uniform, but the signal value varies due to the crowd.
Corneo and Jeanne did not apply to the entire product Veblen effects of the market, it applies to a particular consumer groups. Their findings, the Veblen effect exists in the following two situations: First, if consumers are Snobs, this time on a display of goods even if the market demand curve sloping downward to the right, still appear Veblen effects, the production process: prices, reduce the number of consumers, the commodity value of the snobbery of those signals up to urge them to increase purchase. Second, when consumers are sheep who can also occur with Veblen effect. If the display of the signal value of goods purchased with the increase in the number of upgrade, then the herd by the demand curve is tilted upward to the right, that the higher the price, the greater the demand. This conclusion fit with Veblen's theory: Conspicuous consumption is not the leisure class (Snobs) patents, all sectors of society have this preference. Corneo and Jeanne, but did not specify in the second case the demand curve sloping upward to the right what the reason is to produce effects or Veblen Veblen effect results, but pointed out that when consumers were herd, the demand curve may be tilted upward to the right. Moreover, their model also ignores the interaction between the two types of consumers.
Comeo and Jeanne that if the Veblen effect already in play, then increase the tax on the display of goods will increase its selling prices, thereby raising consumer demand, simply fail to get inhibition conspicuous consumption and improve the social welfare effects.