PARADOXES IN ECONOMIC THEORY

VEBLEN’S PARADOX

 

For the theory that comes by name American sociologist T.Veblen, the main law in economy doesn’t work always: so, decrease of the price of some goods (Veblen goods) don’t lead to demand increase for that goods and contrary, increase of the price of some goods don’t lead to demand decrease for that goods.

For the Veblen’s idea, in some situations it effects by contrary side. When the price of some goods falls, consumers doubt about quality of that. By this way, the decrease of price leads to decrease of demand for those goods.

In the other hand, because of some social groups prefer buying and consuming of expensive, luxury goods as image showing, the increase of prices leads to increase of demand of that kind of goods.

Sometimes, the last paradox names by snob effect. Snob – is the person that blindly tries to imitate tastes and minces of aristocratic society and has got meanness view to all others.

Aghanemat Aghayev