The real thing?
Luxury goods are supposed to be expensive because of their quality: A sip of fine wine or the comforting feel of designer clothing should justify the price. Yet ever since the sociologist Thorstein Veblen developed the idea of “conspicuous consumption” about a hundred years ago, it has been widely accepted that consumers own luxury goods for a second reason as well: to mark their own social status by distinguishing themselves from other groups of people. How much does each of these rationales contribute to the value of high-end products? In a new working paper, “Rethinking Brand Contamination,” Renee Richardson Gosline, an assistant professor at the MIT Sloan School of Management, uses the phenomenon of counterfeit luxury goods to shed new light on this issue. Consumers, Gosline observes, struggle to distinguish the intrinsic qualities of real luxury goods from fakes; instead, they rely heavily on social cues to make those judgments. Indeed,...