JUDGING QUALITY BY PRICE, SNOB APPEAL, AND THE NEW CONSUMER THEORY.
PRINCETON UNIV N J ECONOMETRIC RESEARCH PROGRAM
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The paper provides an analytical treatment of judgment of quality by price and snob appeal. It summarizes the relevant aspects of Lancasters approach and shows how snob appeal and judgment of quality by price can be incorporated into the new consumer theory. Making use of this integration, the authors derive analytically the conditions under which positively sloping demand curves will result. In the course of this demonstration, the new consumer theory provides a vehicle for including prices in the utility functions of traditional theory.
- Economics and Cost Analysis