Social division in the market: conspicuous consumption with nationalist feelings

Ornella Tarola and Skerdilajda Zanaj

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: In this paper, we explore the effects of conspicuous goods as means of social division between native citizens and migrants. We push forward the hypothesis that choosing a particular good can confer a sense of place. We introduce this idea in an international vertical differentiation market with two variants and two social groups: migrants and natives. Natives are narrow- minded since they attribute a positive social value to the variant that complies with their own consumption culture. Migrants are open-minded. When consumers belonging to different groups meet, they exchange information about their consumption habits and consumption well-being that reveals their consumption culture: narrow-minded versus open-minded. Consequently, after meeting, some consumers may change beliefs (narrow-minded to open-minded or vice versa) and consumption choices. Using a dynamic model, we fully elucidate the steady state equilibrium and highlight the impact of nationalism on migrant integration.

Keywords: relative preferences; vertical differentiation; nationalistic consumption; dynamic duopoly. (search for similar items in EconPapers)
JEL-codes: D11 F18 L13 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:19-12

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