Dress to Impress: Brands as Status Symbols

Rogério Mazali and José Rodrigues-Neto

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

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 strati.ed 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 the literature, subsidies may be socially optimal, depending on the parameters, in both market structures.

JEL-codes: C78 H23 L12 L15 (search for similar items in EconPapers)
Pages: 47 Pages
Date: 2011-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Dress to impress: Brands as status symbols (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2011-567

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