SFB 303 Discussion Paper No. A - 464

Author: Corneo, Giacomo, and Olivier Jeanne
Title: Snobs, Bandwagons and the Origin of Social Customs in Consumer Behavior
Abstract: In this paper, we show how consumption norms may be endogenously created in the context of Akerlof's theory of social custom. We present a model in which consumption norms are generated by profit-maximizing producers. We show that the creation of a consumption norm may be viewed as an investment with external effects. A consumption norm may be created only if producers have enough market power.
Keywords: social customs, consumption externalities, optimal dynamic pricing
JEL-Classification-Number: D11, L14
Creation-Date: August 1994
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