The demand for distinction and the evolution of the prestige car

  • G. M. Peter Swann
Conference paper

Abstract

This paper studies the demand for a distinction good — the prestige car — and examines how this demand for distinction influences the evolution of the product. We focus on two very different sorts of distinction car: the Rolls Royce and the Ferrari. These two examples help us to articulate two polar approaches to the demand for distinction: distinction through antiquity and distinction through novelty. The paper sets out a model of the demand for distinction, and uses it to describe two trajectories along which the prestige car — and the demand for it — may evolve.

Keywords

Consumption Demand Design Distinction Product evolution 

JEL-classification

D12 L15 L62 
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. AID (1996) Cars: Western Europe. AID YearbookGoogle Scholar
  2. Akerlof G (1997) Social distance and social decisions. Econometrica 65(5): 1005–1027CrossRefGoogle Scholar
  3. An M, Kiefer N (1995) Local externalities and societal adoption of technologies. Journal of Evolutionary Economics 5: 103–117CrossRefGoogle Scholar
  4. Bagwell LS, Bernheim BD (1996) Veblen effects in a theory of conspicuous consumption. American Economic Review 86(3): 349–373Google Scholar
  5. Banerjee AV (1993) A simple model of herd behaviour. Quarterly Journal of Economics 107: 77–817Google Scholar
  6. Becker GS (1996) Accounting for tastes. Harvard University Press, Cambridge, MAGoogle Scholar
  7. Bellu S (1990) Guida all’Identificazione Ferrari. Giorgio Nada Editore, MilanGoogle Scholar
  8. Bennett M (1995) Rolls Royce and Bentley: The crewe years. G.T. Foulis and Haynes, Yeovil, SomersetGoogle Scholar
  9. Bikhchandani S, Hirschleifer D, Welch I (1992) A theory of fads, fashion, custom and cultural change as informational cascades. Journal of Political Economy 100: 992–1026CrossRefGoogle Scholar
  10. Bourdieu P (1984) Distinction a social critique of the judgement of taste. Routledge Kegan Paul, LondonGoogle Scholar
  11. Buchanan JM, Stubblebine WC (1962) Externality. Economica 29: 371–384CrossRefGoogle Scholar
  12. Coelho PRP, McClure JE (1993) Towards an economic theory of fashion. Economic Enquiry 31: 55–608CrossRefGoogle Scholar
  13. Corneo G, Jeanne O (1999) Social organisation, status and savings behaviour. Journal of Public Economics 70(1): 37–51CrossRefGoogle Scholar
  14. Cowan R, Cowan W, Swann GMP (1997) A model of demand with interaction among consumers. International Journal of Industrial Organisation 15: 711–732CrossRefGoogle Scholar
  15. Cowan R, Cowan W, Swann GMP (1998) Waves in consumption with interdependence among consumers. Working Paper 2/8–011, MERIT, University of Limburg, NetherlandsGoogle Scholar
  16. Deaton AS, Muellbauer J (1980) Economic theory and consumer behaviour. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  17. Donckner EJ, Feichtinger G (1993) Cyclical consumption patters and rational addiction. American Economic Review 83(1): 256–263Google Scholar
  18. Douglas M (1975) Implicit meanings: essays in anthropology. Routledge Kegan Paul, LondonGoogle Scholar
  19. Earl PE (1986) Lifestyle economics: consumer behaviour in a turbulent world. Wheatsheaf, BrightonGoogle Scholar
  20. EIU (1992) European market for Luxury Cars. EIU, LondonGoogle Scholar
  21. EIU (1996) The new car market in Europe. EIU, LondonGoogle Scholar
  22. Fangio J, Giambertone L (1979) La mia vita a trecento all’ora. Aldo Palazzi EditoreGoogle Scholar
  23. Feichtinger G, Prskewetz A, Herold W, Zinner P (1995) Habit formation with threshold adjustment: addiction may imply complex dynamics. Journal of Evolutionary Economics 5: 157–172CrossRefGoogle Scholar
  24. Frank RH (1985) Choosing the right pond: human behaviour and the quest for status. Oxford University Press, New YorkGoogle Scholar
  25. Furnham A, Lewis A (1986) The economic mind: the social psychology of economic behaviour. Wheatsheaf Books, BrightonGoogle Scholar
  26. Gaertner W (1974) A dynamic model of interdependent consumer behaviour. Zeitschrift für Nationalökonomie 34: 327–44CrossRefGoogle Scholar
  27. Gorman WM (1967) Tastes, habit and choices. International Economic Review 8: 218–22CrossRefGoogle Scholar
  28. Granovetter M (1978) Threshold models of collective behaviour. American Journal of Sociology 83(6): 1420–1443CrossRefGoogle Scholar
  29. Granovetter M, Soong R (1986) Threshold models of interpersonal effects in consumer demand. Journal of Economic Behaviour and Organization 7(1): 83–100CrossRefGoogle Scholar
  30. Hirsch F (1976) Social limits to growth. Harvard University Press, Cambridge, MA.Google Scholar
  31. Huxley A (1963) Literature and science. Chatto and Windus, LondonGoogle Scholar
  32. Jevons WS (1871) The theory of political economy. Pelican Classics Edition (1970)Google Scholar
  33. Karni E, Schmeidler D (1990) Fixed preferences and changing tastes. American Economic Review 80: 262–267Google Scholar
  34. Keynes JM (1931) Essays in persuasion. MacMillan, LondonGoogle Scholar
  35. Lancaster KJ (1971) A new theory of consumer demand. Columbia University Press, New YorkGoogle Scholar
  36. Liebenstein H (1950) Bandwagon, snob and veblen effects in the theory of consumers’ demand. Quarterly Journal of Economics 65: 183–207CrossRefGoogle Scholar
  37. Marshall A (1920) Principles of economics, 8th edn. MacMillan, LondonGoogle Scholar
  38. Mason RS (1981) Conspicuous consumption: a study of exceptional consumer behaviour. Gower Publishing, AldershotGoogle Scholar
  39. Miller CM, McIntyre SM, Mantrala MK (1993) Towards formalising fashion theory. Journal of Marketing Research 30: 142–151CrossRefGoogle Scholar
  40. Pesendorfer W (1995) Design innovation and fashion cycles. American Economic Review 85: 771–792Google Scholar
  41. Senior N (1863) Outline of the science of political economy, 5th edn. Charles Griffin, LondonGoogle Scholar
  42. Smith A (1776/1974) The wealth of nations. Pelican Classics Edition. Penguin, HarmondsworthGoogle Scholar
  43. Spar D (1989) The international diamond cartel, Parts A-C. Case Studies C15–89–878.0 to C15–89–880.0, Kennedy School of Government, Harvard UniversityGoogle Scholar
  44. Swann GMP (1990) Product competition and the dimensions of product space. International Journal of Industrial Organisation 8: 281–295CrossRefGoogle Scholar
  45. Swann GMP (1998) Visible and partially visible characteristics: a model of the evolution of a prestige good. Unpublished Paper, Manchester Business SchoolGoogle Scholar
  46. Swann GMP (1999) Marshall’s consumer as an innovator. In: Dow SC, Earl PE (eds) Economic organisation and economic knowledge: Essays in honour of Brian J. Loasby, Vol I. Edward Elgar, CheltenhamGoogle Scholar
  47. Veblen T (1989) The theory of the leisure class: an economic study of institutions. MacMillan, New YorkGoogle Scholar
  48. Weizäcker CC von (1971) Notes on endogenous changes of tastes. Journal of Economic Theory 3: 345–372CrossRefGoogle Scholar
  49. Young P (1993) The evolution of conventions. Econometrica 61: 57–84CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2001

Authors and Affiliations

  • G. M. Peter Swann
    • 1
  1. 1.Manchester Business SchoolUniversity of ManchesterManchesterUK

Personalised recommendations