No pain, no gain: implications in consumption and economic growth
Tianyu Sun and
MPRA Paper from University Library of Munich, Germany
Demand saturation occurs along with economic development, but the theoretical basis for demand saturation is lacking. This study adds to literature by proposing a novel concept named utilization cost, which denotes the physical or mental burden incurred to obtain utility. Correspondingly, we distinguish between quantity and quality of consumption and construct a general utility function. With a generative decision procedure, the analysis shows that utilization costs help to explain the economic dynamics across development stages in terms of demand saturation. And, the long-term state of demand is affected by the properties of utilization costs, determining development directions.
Keywords: Demand saturation; Consumption; Economic growth (search for similar items in EconPapers)
JEL-codes: D11 E10 O30 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:118081
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