Reply to post: Re: Giffen good?

Does Google make hardware just so nobody buys it?

Charles 9 Silver badge

Re: Giffen good?

As I read it, the two work slightly differently.

In a Veblen good, the perceived value of a good (its "status symbol" value) rises WITH the price, precisely BECAUSE it's expensive. Something like a Rolls Royce or a very old bottle of single-malt Macallan.

In a Giffen good, the price itself (and alone) determines its desirability. When it goes up, so does the demand. This goes to the other end of the price scale, where low prices get instantly perceived as "cheap" or even "substandard". Best way to see this is in common consumables like fresh produce (where a cheap product would be seen as marked down because they're trying to move it before it goes bad). Or, another way, it's something that people will ONLY buy because they can't afford anything else; IOW, people don't substitute the Giffen good because the GIffen good IS the substitute for something they'd rather have but can't afford anymore.

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