Status and welfare under monopolistic competition

What is it about?

What a modern consumer economy is like? It is not like what is portrayed in a standard textbook economic model: goods in the same industry are homogenous and consumers are concerned with only their own consumption. In the real world, product variety is valued while social status is pursued via consumption. The point of this paper is that these two elements should be incorporated in a model and assess if some conventional wisdoms in economics should then be revised. Our answer is yes. The paper is a marriage of the prevalent macroeconomic literature (monopolistic competition) with a sociology concept (social status).

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