The Rise of Mass Consumption Societies

Kiminori Matsuyama

STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: This paper develops a model to understand mechanisms behind the rise of mass consumption societies. The development process depicted in the model follows the Flying Geese pattern, in which a series of industries takes off one after another. As productivity improves in these industries, each consumer good becomes affordable to an increasingly large number of households, which constantly expand the range of goods they consume. This in turn generates larger markets for consumer goods, which leads to further improvement in productivity. In order for such two-way causality to generate virtuous cycles of productivity gains and expanding markets, income distribution should be neither too equal nor too unequal. Some income inequality is needed for the economy to take off; too much equality means that the economy stagnates in a poverty trap. With too much inequality, the economy's development stops prematurely. The rise of a mass consumption society is thus an essential element for sustainable development

Keywords: Income distribution; earning-by-doing; endogenous technological changes; nonhomothetic preferences; demand complementarity; the domino effect; cooperative dynamical systems. (search for similar items in EconPapers)
Date: 2000-11
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Citations: View citations in EconPapers (2)

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https://sticerd.lse.ac.uk/dps/de/dedps23.pdf (application/pdf)

Related works:
Journal Article: The Rise of Mass Consumption Societies (2002)
Working Paper: The rise of mass consumption societies (2000)
Working Paper: The Rise of Mass Consumption Societies (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stidep:23

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