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No pain, no gain: implications in consumption and economic growth

Tianyu Sun and Liu Tian

MPRA Paper from University Library of Munich, Germany

Abstract: 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)
Date: 2023-07-01
New Economics Papers: this item is included in nep-gro and nep-upt
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