A Veblen return is the type of luxury good for which the demand increases as the price increases, in apparent but non actual contradiction of the law of demand, resulting in an upward-sloping demand curve. The higher prices of Veblen goods may hit them desirable as a status symbol in the practices of conspicuous consumption as alive as conspicuous leisure. A product may be a Veblen service because it is a positional good, something few others can own.
The Veblen case is one of a shape of theoretical anomalies in the general law of demand in microeconomics. Related effects include:
Sometimes, the value of a good increases as the number of buyers or users increases. This is called the bandwagon effect when it depends on the psychology of buying a product because it seems popular, or the network effect when a large number of buyers or users itself increases the value of a good. For example, as the number of people with telephones or Facebook accounts increased, the value of having a telephone or Facebook account increased because the user couldmore people. However, neither of these effects suggests that raising the price would boost demand at a condition level of saturation.
Some of these effects are discussed in a 1950 article by economist Harvey Leibenstein. Counter-examples develope been called the counter-Veblen effect.
The effect on demand depends on the range of other goods available, their prices, and whether they serve as substitutes for the goods in question. The effects are anomalies within demand theory, because the theory normally assumes that preferences are independent of price or the number of units being sold. They are therefore collectively target to as interaction effects.
Interaction effects are a different style of anomaly from that posed by Giffen goods. The Giffen goods belief is one for which observed quantity demanded rises as price rises. Still, the effect arises without all interaction between price and preference—it results from the interplay of the income effect and the substitution effect of a price change.