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http://hdl.handle.net/10419/38721
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| Title: | | Questionable luxury taxes: Results from a mating game  |
| Authors: | | Thomas, Tobias |
| Issue Date: | | 2008 |
| Series/Report no.: | | Diskussionspapier // Helmut-Schmidt-Universität Universität der Bundeswehr Hamburg, Fächergruppe Volkswirtschaftslehre 86 |
| Abstract: | | This contribution provides a game theoretical derivation of market demand as a function of the level and distribution of income in the considered economy: if (i) the price is low, everyone buys the good; if (ii ) the price is high, only the rich buy the good (a status good in a narrow sense). If (iii) the price is located in very high or in middle range, demand collapses. With this, we explain the critical price from which a status good acts as a distinctive signal. In addition, this approach shows the potential welfare-improving impact of conspicuous consumption. Taking these results into account, recommendations by numerous economists to prevent the welfare losses of conspicuous consumption by introducing a luxury tax are highly questionable. |
| Subjects: | | luxury tax conspicuous consumption mating model signaling game status good |
| JEL: | | C70 |
| Persistent Identifier of the first edition: | | urn:nbn:de:gbv:705-opus-17176 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Diskussionspapiere, Fächergruppe VWL, Helmut-Schmidt-Universität
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