This reminds me of a paper I read as an undergrad in micro theory. I
think it was by Harvey Liebenstein and titled Bandwagon, Snob, and Veblen
Effects. I don't remember the journal, but it was probably from the 1960s
or early 1970s.
Art Woolf
On Tue, 26 Sep 2000 [EMAIL PROTECTED] wrote:
>
> All this time I've been living under the impression that there wasn't a Santa Claus
>and that upward sloping demand curves were the unicorns of economic theory. Alas, I
>was wrong.
>
> The current presidential race had already convinced me that Santa Claus does in fact
>exist afterall, and he even comes with a running mate. And now I've finished reading
>the Anderson/Simester study (May 2000):
>
> The Role of Price Endings: Why Stores May Sell More at $49 than at $44
>
> First, Santa Claus - and now I've had to throw in the towel on upward sloping demand
>curves as well.
>
> This joint Chicago/MIT study, utilizing a large catalog field test, found that
>increasing the price of an item from $44 to $49 may actually increase demand of that
>item (quantity demanded for the anal-retentive on the List) by up to 30%. This
>paradox is related to the "fact" that $9 price endings lead to favorable customer
>price perceptions and increased customer demand. However, overuse of the $9 price
>ending dilutes this effect, as does the simultaneous use of sale signs.
>
> Furthermore, the study suggests that this is all a quite rational response to a
>marketing cue.
>
> Let's ponder the ramifications of this study. Now we have the possibility of
>parallel demand and supply curves . . .the absence of an equilibrium price and
>quantity . . .sacrilege!
>
> J. Morrison
> New York, NY
>
>
********************************************************************
Art Woolf Phone: (802) 656-4711
Vermont Council on Economic Education
219 Kalkin Hall
University of Vermont email: [EMAIL PROTECTED]
Burlington, VT 05405
