Luxury goods, vertical restraints and internet sales

@article{Pruzhansky2014LuxuryGV,
  title={Luxury goods, vertical restraints and internet sales},
  author={Vitaly Pruzhansky},
  journal={European Journal of Law and Economics},
  year={2014},
  volume={38},
  pages={227-246}
}
We propose a model describing consumer demand for a luxury good, in which the perceived quality of the good is related to its scarcity. We use this model to analyze the optimal production and price setting decisions of a luxury good manufacturer and contrast them with the decisions that would be made by a social planner. We show that irrespective of the way social welfare is defined, a monopoly producer of the luxury good may select socially optimal prices and quantity. Thus the incentives of… CONTINUE READING

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