A Bandwagon Effect in Personalized License Plates?

Jeff Biddle

Economic Inquiry, 1991, vol. 29, issue 2, 375-88

Abstract: The bandwagon effect is a consumption externality that exists when an individual's demand for a good is increased by his observation of other consumers using that good. This paper models a product demand curve with a bandwagon effect and, using data on sales of personalized license plates, estimates such a demand curve. Certain more conventional models of product demand, including information diffusion and habit formation models, are observationally similar to the bandwagon model, despite being conceptually different from it. The author attempts to use the license plate data to discriminate between the bandwagon model and these other models. Copyright 1991 by Oxford University Press.

Date: 1991
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