 in economics, a veblen good is a member of a group of commodities whose demand is proportional to their price; an apparent contradiction of the law of demand. a veblen good is often also a positional good. the veblen effect is named after economist thorstein veblen, who first identified the concepts of conspicuous consumption and status-seeking in 1899.veblen, t. b. (1899). the theory of the leisure class. an economic study of institutions. london: macmillan publishers. == rationale == some types of luxury goods, such as high-end wines, jewelry, designer handbags, and luxury cars, are veblen goods, in that decreasing their prices decreases people's preference for buying them because they are no longer perceived as exclusive or high-status products. similarly, a price increase may increase that high status and perception of exclusivity, thereby making the good even more preferable. at the other end of the spectrum, with luxury items priced equal to non-luxury items of lower quality, all else being equal more people would buy the luxury items, even though a few veblen-seekers would not. thus, even a veblen good is subject to the dictum that demand moves conversely to price, although the response of demand to price is not consistent at all points on the demand curve. == related concepts == the veblen effect is one of a family of theoretically possible anomalies in the general theory of demand in microeconomics. other related effects include: * the snob effect: expressed preference for goods because they are different from those commonly preferred; in other words, for consumers who want to use exclusive products, price is quality. * the bandwagon effect: preference for a good increases as the number of people buying them increases (a psychological effect). * the network effect: value of a good increases as the number of buyers or users increases (e.g., as the number of people with telephones or facebook increased, its value increased since the user could reach more people). * the common law of business balance: low price of a good indicates that the producer may have compromised quality, that is, "you get what you pay for". some of these effects are discussed in a
Consumer_theory Goods