Veblen goods

What are Veblen Goods in Economy?

Veblen goods provide the consumer greater satisfaction (or utility) as the price increases.  A veblen good is a good where demand rises as price rises. people think more expensive goods are better quality, and so people buy more. Studies suggest people do get more satisfaction from receiving expensive goods. It is possible that designer clothes or luxury cars may sometimes meet the criteria of veblen goods. This is often termed the snob effect – people equate price to quantity. They are not inferior goods.

Fine Examples

a) Luxury Cars

b) Gucci bag

c) Expensive Wines

The utility of such goods is associated with their ability to denote status. Decreasing their price decreases the quantity demanded because their status denoting utility becomes compromised.

Also Read:

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• Indifference Curve
• 1991 Economic Reforms in Indian Economy(TM)
• Important Committees formed in relation to Indian Economy(TM)
• Repo Rate, Reverse Repo, Uses, Pricing & Types of Repo Explained
• Different Types of Banks in Indian Economic System
• Reserve Bank of India (RBI) & Its Functions: Promotional & Supervisory Explained
• Neethi Aayog - Structure & Functions (TM)