Why some things sell MORE when the price goes up

Basic economics says raise the price and people buy less. But for a strange class of items called Veblen goods, the opposite happens — a higher price can actually increase demand. Named after economist Thorstein Veblen, who coined the term conspicuous consumption, these are goods bought largely to signal wealth and status: luxury watches, designer handbags, premium sports cars.

The trick is that the price is the product. A $12,000 handbag isn't seen as ten times more useful than a $1,200 one — it's desirable because it's expensive, broadcasting that the owner can afford it. Slash the price and you don't attract more buyers; you destroy the exclusivity that made it appealing in the first place. This is why luxury brands rarely hold big public discount sales and sometimes even destroy unsold stock rather than mark it down.

Veblen goods break the normal law of demand (the rule that demand falls as price rises) but only over certain ranges and for certain buyers — status-seekers. They're cousins to Giffen goods, another rare exception, though Giffen goods work for the opposite reason: extreme necessity among the poor. Both remind us that price isn't just a cost — it can be a signal all by itself.