A Model of the "It" Products in Fashion

dc.contributor.authorKuksov, Dmitrien_US
dc.contributor.authorWang, Kangkangen_US
dc.date.accessioned2014-07-23T19:42:17Z
dc.date.available2014-07-23T19:42:17Z
dc.date.created2012-11-05en_US
dc.date.submitted2011-07-21en_US
dc.description.abstractOne of the characteristics of the fashion marketplace is the unpredictability and apparent randomness of fashion hits. Another one is the information asymmetry among consumers. In this paper, we consider fashion as a means consumers use to signal belonging to a higher social rank and propose an analytical model of fashion hits in the presence of competition and consumers who can coordinate on which product to use. We show that, consistent with the observed market phenomenon, in equilibrium, consumer coordination involves randomization between products chosen, i.e., in randomness of fashion hits. Analyzing optimal consumer choice, we find that whenever low-type consumer demand for a product is positive, a price increase results in a higher probability of high-type consumers choosing this product but lower low-type consumer demand. We also show that although high-type consumers may prefer (higher) prices that would lead to complete separation of the high- and the low-type consumers through product use, in equilibrium, firms always price as to attract positive demand from low-type consumers. The equilibrium price and profits turn out to be nonmonotonic in the low-type consumer valuation of being recognized as belonging to a higher social rank. Equilibrium profits first increase and then decrease in this valuation.en_US
dc.identifier.bibliographicCitationKuksov, Dmitri, and Kangkang Wang. 2013. "A model of the "it" products in fashion." Marketing Science 32(1): 51-69.en_US
dc.identifier.issue1en_US
dc.identifier.startpage51en_US
dc.identifier.urihttp://hdl.handle.net/10735.1/3788
dc.identifier.volume32en_US
dc.relation.urihttp://dx.doi.org/10.1287/mksc.1120.0742en_US
dc.rights©2013 INFORMS.en_US
dc.rights.urihttp://pubsonline.informs.org/page/terms-and-conditionsen_US
dc.source.journalMarketing Scienceen_US
dc.subjectGame theoryen_US
dc.subjectStatus goodsen_US
dc.subjectUncertaintyen_US
dc.subjectConsumer signallingen_US
dc.subjectPricesen_US
dc.titleA Model of the "It" Products in Fashionen_US
dc.typetexten_US
dc.type.genrearticleen_US
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