Example of a utility function representing preference over Veblen goods

[Amit Goyal]

Hi

This answer provides an example of a utility function that represents preferences where one of the goods is a Veblen good. This answer also offers a way to think about Veblen Goods that takes into account two different perspectives that are usually considered applicable here. On one hand, it considers the aggregate view where a change in price results in a change in demand through both changes in preferences and the standard effect seen in aggregate, as reflected by the upward sloping demand curve. On the other hand, we can also examine the effect separately by analyzing the impact of changes in preferences (due to price change) through a separate shift in the demand curve.

https://economics.stackexchange.com/a/54899/11824

I'll be happy to have further discussions on this.

Best,

Amit