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The Price for Exclusivity

It’s no secret that people want to engage in activities that prove and display their superiority over others. In the world of consumer choice, this means people want what others want but can’t have. The feeling of exclusivity and superiority comes from the possession of what others cannot have. This is called “mimetic dominance” and it raises the valuation of a product whether or not they liked it to begin with.

According to Chicago Booth’s Alex Imas and London School of Economics’ Kristóf Madarász, a consumer’s willingness to pay grows as the product’s appeal to others increases, but only if others are excluded from purchasing the product. That exclusivity is what makes these products and services luxury.

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