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PRICING SUPERIOR GOODS: UTILITY GENERATED BY SCARCITY
Author(s) -
Yao Shuntian,
Li Ke
Publication year - 2005
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2005.00290.x
Subject(s) - economics , scarcity , value (mathematics) , china , marginal cost , marginal value , microeconomics , point (geometry) , marginal utility , computer science , geometry , mathematics , machine learning , political science , law
. We discuss the pricing of a superior good based on its ‘signalling value’. Our model and analysis offer a different explanation of why in China and some other Asian countries the prices of luxury goods are extremely expensive when they are first marketed, then fall dramatically and discontinuously afterwards, when marginal costs decline to below the critical point and the goods become more popular.