Property Rights, Consumption and the Market Process

Property Rights, Consumption and the Market Process

New Horizons in Institutional and Evolutionary Economics series

David Emanuel Andersson

Property Rights, Consumption and the Market Process extends property rights theory in new and exciting directions by combining complementary insights from Austrian, institutional and evolutionary economics. Mainstream economics tends to analyse property rights within a static equilibrium framework. In this book David Andersson reformulates property rights theory as an evolutionary theory of the market process.

Chapter 7: Institutions and the Demand for Consumption Attributes

David Emanuel Andersson

Subjects: economics and finance, evolutionary economics, institutional economics


The problems for the maximizing model that I identified in the preceding chapter apply to individuals in isolation. There is also the problem that the preferences of an individual consumer may not be independent of the preferences of other consumers. People may wish to engage in ‘conspicuous consumption’ (Veblen, 1899; Marshall, 1920), which is to say that they strive for distinction in an intersubjective sense (Duesenberry, 1949). The reason for this is that much consumption is expressive towards other people, and its explanation as preferences that are independent of the consumption environment therefore misses an aspect of consumption that the consumers themselves perceive as important. Sometimes, this expressiveness manifests itself as reduced functionality of the intrinsic purpose of consumption. An example is when the number of people already having access to a telephone influences the utility that one consumer derives from one telephone (Å. Andersson and D. Andersson, 2006). If we assume a market process that consists of individuals with preferences that are initially independent from one another, then that process would not by itself produce a tendency towards homogeneous preferences. To the extent that there would be such homogenizing tendencies, it would be the result of imitative behaviour. Imitative behaviour among agents may therefore lead to the emergence of institutions. In the analysis of consumer behaviour, we conceive of observable institutions as durable and shared habits of action. These habits of action may in turn derive from habits of thought or general dispositions, which consequently correspond to the...

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