Chapter 2: The economics of status and superstar markets
The intensification of competition and the impact of status markets constitute now a global phenomenon, which is influenced by complex forces. The orthodox thought in economic analysis does not provide the analytical tools for an adequate understanding of this process. There are various factors and complex interlinkages to be considered, which involve the emergence of new services, the influence of information technology, television, social media, globalization and culture change. Therefore, the analysis of status markets can be enriched with assumptions that are not viewed as fundamental in traditional economic thought. For example, the marginal approach which views technological progress, tastes or preferences and institutions as given must be superseded by an analysis that allows for the impact of changes in these forces. In addition, since status markets are highly influenced by rapid changes in technological progress, preference shifts and institutional reform, it is necessary to expand the area of study. This involves the examination of various subjective and institutional factors and the overturn of standard concepts in traditional economic analysis such as, for example, the assumption of diminishing returns to scale. Therefore, from an economist’s perspective, an essential task is to examine status markets through an eclectic approach, which facilitates the integration of different forces and perspectives. What follows is the development of an economic framework that meets these criteria. More precisely, the framework developed in this chapter allows for the influence of both objective and subjective factors.
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