Fashion with Snobs and Bandwagoners in a Three-Type Households and Three-Sector Neoclassical Growth Model

Abstract

This study deals with interactions between fashion, economic growth and income and wealth distribution in a growth model of heterogeneous households with economic structure. The modelling of fashion and preference change is inspirited by the economic model of fashion recently published by Giovinazzo and Naimzada (2015). We introduce fashion consumption, fashion industry and preference change with regards to fashion goods into a general equilibrium dynamic growth model proposed by Zhang (2012, 2013). The economy consists of three groups of people (the snob, the bandwagoner, and the consumer) and three production (capital goods, consumer goods, and fashion) sectors. The motion of the economic system is described by a set of differential equations. For illustration, we simulate the motion of the economic system. We identify the existence of a unique stable equilibrium point. We also carry out comparative dynamic analysis. The comparative analyses provide some insights into the complexity of economic growth with fashion.