Dress to impress: Brands as status symbols

Rogério Mazali and José Rodrigues-Neto

Games and Economic Behavior, 2013, vol. 82, issue C, 103-131

Abstract: We analyzed the market for indivisible, pure status goods. Firms produce and sell different brands of pure status goods to a population that is willing to signal individual abilities to potential matches in another population. Individual status is determined by the most expensive status good one has. There is a stratified equilibrium with a finite number of brands. Under constant tax rates, a monopoly sells different brands to social classes of equal measure, while in contestable markets, social classes have decreasing measures. Under optimal taxation, contestable markets have progressive tax rates, while a monopoly faces an adequate flat tax rate to all brands. In contrast with extant literature, subsidies may be socially optimal, depending on the parameters, in both market structures.

Keywords: Brand; Competition; Free entry; Matching; Monopoly; Signaling; Status; Tax; Welfare (search for similar items in EconPapers)
JEL-codes: C78 H23 L12 L15 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Dress to Impress: Brands as Status Symbols (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:82:y:2013:i:c:p:103-131

DOI: 10.1016/j.geb.2013.06.009

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