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Design Innovation and Fashion Cycles

Authors: Pesendorfer, Wolfgang;

Design Innovation and Fashion Cycles

Abstract

A model of fashion cycles is developed in which fashion is used as a signalling device in a "dating-game". We assume that there is a designer (monopolist) who can create new designs at a positive fixed cost and zero marginal cost. Designs are durable commodities. We show the existence of equilibria of the following form: Every T periods a new design is innovated. Over time the price of the design falls and it spreads to more and more agents. Once sufficiently many agents own the design it is profitable to create a new design and a new fashion cycle begins. We also examine the case when there is competition among potential deisigners and show that there are equilibria in which fashion changes less frequent and the price of fashion remains bounded above the corresponding price in the monopoly case.

Keywords

ddc:330

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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