Does a veblen good need to have a physical existence?

[haele]

10. Take a really high end luxury car - Rolls Royce. A lower priced Rolls will not sell.

The consumer thinks "No way it can be better than a Lexis, so I'd rather buy the Lexus" They "know" what they're getting with the Lexus and won't have to worrying about paying Rolls service costs fixing the all the shortcuts Rolls "must have had to implement to bring the cost down".

Rolls Royce is a velben good. As is Rolex or Cartier. They're niche market goods, intended to be "heirloom" item to last generations and keep it's value as time went on.

Once those brands try to leave their niche and diversify to reach a wider market, they will tend to lose value both within and without their niche because they lose their exclusivity.

Haele