![]() ![]() His description of Henry George's writings during the Gilded Age was particularly memorable. He was a masterful lecturer, every word he spoke had been carefully chosen over decades of teaching. As an undergraduate I studied those years in a history class taught by Professor Geoffrey Blodgett. Guilded Age Insights for Guilded Watches The Guilded Age refers to the years after the United States Civil War and prior to the beginning of the 20th century, roughly 1870-1900. To preserve Veblen effects haute horologists must avoid a pooling equilibrium in which their products are perceived as fundamentally the same as low cost products.Instead they pursue adequate capacity to achieve profitability. Veblen effects mean that luxury manufacturers can not follow the standard practice used to maximize profits.For such goods a higher price signals greater social status which can strengthen demand. Luxury watches are an indicator of social position.I will relegate most of the math to an appendix which I will offer elsewhere. Fair warning: I have steered clear of the math which we economists use to investigate markets but that will have to end here. In this article I will explore additional reasons why the law of demand doesn't apply to luxury watches and, further, show that many features of the luxury watch market can be explained by nontraditional consumer behavior. The watch market, then, serves as an exception to the prevailing notion that as a product gets more expensive people buy less of it, otherwise known as the law of demand (a law which tends to hold for almost any product). This means that, at least along one dimension, buyers might be more inclined to buy a watch as prices go up. For example, since watches can serve as a highly convenient source of portable liquidity, when prices go up the liquidity benefit from a watch is greater because you can carry around more value on your wrist. In prior articles I have discussed the unorthodox role of prices in luxury watch markets. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |