Definition of luxury goods and examples:
How luxury goods work:
Luxury goods vs. ordinary goods and bad goods:
Old luxury goods vs. new luxury goods:
Philippine goods:
Definition of luxury goods
Luxury goods are products or services that are considered elite in the society they are found in. Luxury items can be goods such as designer bags or watches, or services like private chauffeurs or golf club memberships. Consumers tend to buy more luxury goods as their wealth increases.
How luxury goods work
The demand for luxury goods tends to rise in line with a person’s wealth or income, meaning that income elasticity is positive. Ordinary goods are also elastic – as people spend more on necessities with an increase in income. However, the demand for luxury goods relative to income is greater than for ordinary goods.
Luxury goods vs. ordinary goods and bad goods
Bad goods are the opposite of luxury goods. Bad goods are items that consumers purchase less of as their income increases. The demand for luxury and ordinary goods increases once consumers gain wealth. However, the demand for bad goods – such as cheaper brands of processed food – declines as they can afford better options. Therefore, bad goods are said to have negative income elasticity.
Old luxury goods vs. new luxury goods
Luxury goods can be categorized as “old” or “new” based on what consumers value. Old luxury is associated with established brands that have an exclusive reputation, while new luxury may relate to experiences over tangible products and brands that resonate with consumer identity. New luxury can also be seen as a response to the shift from physical products to digital goods and reflects consumers’ desire for a more personalized experience.
Philippine goods
Philippine goods are luxury items that see increased demand with rising prices. Philippine goods defy the law of demand, which states that consumers demand less of a good as its price rises. On the contrary, Philippine goods are desirable because they are expensive. Philippine goods are linked to conspicuous consumption or the idea that luxury items transcend their practical purpose to convey social status. For some consumers, the price signals social standing, with possessions like luxury cars and designer clothes serving as indicators of wealth. The market for counterfeit luxury goods is also derived from conspicuous consumption and the desire to flaunt wealth.
Source: https://www.thebalancemoney.com/what-is-a-luxury-item-5193484
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