Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/31844 
Year of Publication: 
2006
Series/Report no.: 
Papers on Economics and Evolution No. 0603
Publisher: 
Max Planck Institute of Economics, Jena
Abstract: 
Market growth is driven by product innovation. Beyond functional satiation the marginal utility of product performance and variety decreases. We argue that social comparisons underlying innovation diffusion results in consumer motivations for upward assimilation toward the behavior of better performing others, even beyond functional requirements. We distinguish consumption growth patterns driven by functional vs. assimilating motivations. These patterns are tested by time-series analyses of U.S. Footwear consumption between 1955 and 2002. The acceleration of market growth since the 1970s is statistically explained by changes in price, cross-price elasticity, and the increasing demand for innovations, according to our theoretical account of consumption motivations beyond functional satiation.
Subjects: 
Product Innovation
Innovation Diffusion
Consumption Growth
Social Comparison
Time-Series Analysis
JEL: 
C22
D01
D12
L67
O33
Document Type: 
Working Paper

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