140 Veblen Effect
A tendency to find a product more desirable because it has a high price.
• Proposed by the economist Thorstein Veblen.
• In certain cases, higher prices increase demand, and lower prices decrease demand.
• For example, the effect is most pronounced for items and services that signal status, such as art, jewelry, clothes, cars, fine wines, hotels, and luxury cruises.
• High prices increase perceived quality, and low prices decrease perceived quality.
• Consider the Veblen effect in marketing and pricing. Promote associations with high status people (e.g., celebrities). Employ strategies to discourage knockoffs, including legal protection, watermarking, and aggressive counter-advertising. Set prices high based on the intangible ...
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