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The paper develops a signalling theory of conspicuous consumption where the drive toward spending on an otherwise … equilibria and the separating equilibria of the signalling game played by individuals. We then ask whether taxation can be Pareto …-improving and which tax scheme would be chosen by the median voter in this society …
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Conspicuous consumption of luxuries plays a central role in the work of Thorstein B. Veblen. More recently, interpersonal effects have emerged as an important factor in consumption theory. However, the inadequate modelling of individuals interaction often leads to questionable results with...
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A century ago, Thorstein Veblen introduced socially contingent consumption into the economic literature. This paper complements the scarce empirical literature by testing his conjecture on South African household data and finds that Black and Coloured households spend relatively more on visible...
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