Abstract
Veblen effects and counter-effects occur when product prices signal consumer wealth. This study quantifies such effects and counter-effects through a quasiexperimental approach that addresses identification threats inherent to social interactions, unobserved supply factors, alternative social processes, unobserved consumption utility, and alternative effects of prices. The analysis capitalizes on the richness of a four-dimensional panel data set on automobile rentals to reveal that consumer sensitivity to local rankings of selling-prices of products is highly heterogeneous, often negative, and comparable in magnitude to consumer sensitivity to rental fees. Additional analyses suggest that the estimated effects of price rankings do reflect positional concerns and conspicuous consumption.
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