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> But as Solca observes, there are good commercial reasons why rationing by queue rather than price can make sense. > First, it gives Hermès a buffer: even if

> But as Solca observes, there are good commercial reasons why rationing by queue rather than price can make sense. > First, it gives Hermès a buffer: even if demand drops, sales will not. > Second, it creates surplus demand for the bags, which overflows into demand for other Hermès products. Much of the firm’s business consists of selling consolation prizes: wallets, belts, beach towels and so on. As J.N. Kapferer of the Inseec Luxury Institute in Paris observes, the wait induces “impatient buyers to switch to other products of the brand, to calm their hunger until the much-awaited object of desire is achieved.” > Third, although market-clearing prices might raise profitability in the short term, in the long run they would drive French women away, leaving nouveaux riches from the developing world as the bags’ main buyers. If elegant Parisiennes lose interest, so, eventually, will women who aspire to be like them. 'economics' would make more sense if offered as a humanities course

HDThoreaun 3y ago
Veblen goods are a topic that is covered in the first semester of any serious econ program. Buying them is perfectly rational and can be modeled mathematically.
- morelisp 3y ago
  At this point, an economist would tend to usher in the argument made by Thorstein Veblen... Yet in a couple of ways, Birkins do not look like classic Veblen goods.
  - davidw 3y ago
    So it's not econ 101. That's what makes it interesting and noteworthy?
- paulette449 3y ago
  Veblen Goods sounded a lot like Giffen goods which were covered in the economics module of my CS degree. I had to check, they're related [1]: "... both Veblen and Giffen goods have an upward-sloping demand curve. This means that demand for them increases when their price increases. Their main difference is in the type of good. Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them." [1] - https://www.investopedia.com/terms/v/veblen-good.asp https://www.investopedia.com/terms/v/veblen-good.asp
  - blowski 3y ago
    That’s not the best explanation of Giffen goods, since it only covers price inelasticity. The key point of Giffen goods is that, as they become more expensive, you have less to spend on alternatives and thus have to buy more of the Giffen good. For example, you normally spend 10% of your income on pasta but then the price doubles. With less disposable income, you can afford less meat, so buy more pasta instead. That said, there’s very scant evidence such an effect exists in the real world.
    - deleted 3y ago
      [deleted]
  - jetrink 3y ago
    > Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them. The way Giffen goods were explained to me is that not only is there no substitute for a Giffen good, it is the substitute. Imagine you eat meat and potatoes and the price of potatoes increases. If you can no longer afford your regular diet and need to cut costs, well, meat is probably still more expensive than potatoes, so you buy less meat and even more potatoes.
  - smiley1437 3y ago
    Is healthcare a Giffen good? Because that would explain a lot about the prices in the US healthcare system edit: look like some people think so: https://seekingalpha.com/article/4103336-healthcare-ultimate-giffen-good https://seekingalpha.com/article/4103336-healthcare-ultimate... https://www.econlib.org/archives/2006/01/giffens_paradox_1.html https://www.econlib.org/archives/2006/01/giffens_paradox_1.h... https://gulzar05.blogspot.com/2007/05/giffen-goods.html?m=1 https://gulzar05.blogspot.com/2007/05/giffen-goods.html?m=1
boc 3y ago
I’m begging HN to stop assuming they understand economics before dismissing the entire profession.
- deciplex 3y ago
  I'm begging economists to stop assuming that the lessons of their profession apply to every aspect of human behavior.
  - AussieWog93 3y ago
    I'm not sure that serious economists do?

HDThoreaun 3y ago

Veblen goods are a topic that is covered in the first semester of any serious econ program. Buying them is perfectly rational and can be modeled mathematically.

morelisp 3y ago
At this point, an economist would tend to usher in the argument made by Thorstein Veblen... Yet in a couple of ways, Birkins do not look like classic Veblen goods.
- davidw 3y ago
  So it's not econ 101. That's what makes it interesting and noteworthy?
paulette449 3y ago
Veblen Goods sounded a lot like Giffen goods which were covered in the economics module of my CS degree. I had to check, they're related [1]: "... both Veblen and Giffen goods have an upward-sloping demand curve. This means that demand for them increases when their price increases. Their main difference is in the type of good. Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them." [1] - https://www.investopedia.com/terms/v/veblen-good.asp https://www.investopedia.com/terms/v/veblen-good.asp
- blowski 3y ago
  That’s not the best explanation of Giffen goods, since it only covers price inelasticity. The key point of Giffen goods is that, as they become more expensive, you have less to spend on alternatives and thus have to buy more of the Giffen good. For example, you normally spend 10% of your income on pasta but then the price doubles. With less disposable income, you can afford less meat, so buy more pasta instead. That said, there’s very scant evidence such an effect exists in the real world.
  - deleted 3y ago
    [deleted]
- jetrink 3y ago
  > Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them. The way Giffen goods were explained to me is that not only is there no substitute for a Giffen good, it is the substitute. Imagine you eat meat and potatoes and the price of potatoes increases. If you can no longer afford your regular diet and need to cut costs, well, meat is probably still more expensive than potatoes, so you buy less meat and even more potatoes.
- smiley1437 3y ago
  Is healthcare a Giffen good? Because that would explain a lot about the prices in the US healthcare system edit: look like some people think so: https://seekingalpha.com/article/4103336-healthcare-ultimate-giffen-good https://seekingalpha.com/article/4103336-healthcare-ultimate... https://www.econlib.org/archives/2006/01/giffens_paradox_1.html https://www.econlib.org/archives/2006/01/giffens_paradox_1.h... https://gulzar05.blogspot.com/2007/05/giffen-goods.html?m=1 https://gulzar05.blogspot.com/2007/05/giffen-goods.html?m=1

boc 3y ago

I’m begging HN to stop assuming they understand economics before dismissing the entire profession.

deciplex 3y ago
I'm begging economists to stop assuming that the lessons of their profession apply to every aspect of human behavior.
- AussieWog93 3y ago
  I'm not sure that serious economists do?