Does a downward sloping demand curve exist in luxury industries?

Question

correction; that is meant to be "upward sloping demand curve".

Answer 1

Actually what you are asking about are sometimes called Veblen goods or snob goods. The theory is that if the price increases the good becomes more desire able. An example would be the gaudy leather nascar jackets. When the price went up people wanted more. The question of whether this is an upward sloping demand curve is a question of semantics. The demand curve is the relationship b/w price and q demanded ceteris paribus. The problem is that when you increase price tastes change and thus you get an increase in demand not a movement along it. So it appears to be upward sloping but under the strictest definition of demand it is not.

I hope that even if you think this definition is too strict you realize that this can only occur for a range of prices otherwise tacky jackets would be priced at a billion dollars and everyone would want one. Remember demand represents the amount people are willing and ABLE to pay.

Answer 2

Well it depends on what are classified "luxuries" but if it doesn't exist now it soon will once this becomes a politically correct target for taxation, which simply means rich people will either find a way to not classify them as luxuries, or purchase them from foreign sources,and the only one really punished will be the firms that make and sell these products, and their employees, and suppliers, and the local municipalities depending on those industries and jobs.

Answer 3

Goods associaed with an upward-sloping demand curve are referred to as Giffen Goods. To date, I don't think economists have been able to find a real-world example.

Answer 4

the demand curve for luxary industries are price inelastic. So it's not going to increase is price falls.