Veblen effects and their impact on the new European community and some of their trading partners

This paper seeks to examine the impact of the interdependence of consumer markets in the EEC countries on consumer behavior. We also wish to measure potential taste shifting effects. These ‘Veblen effects’ arise from the impact that prices and income have directly on the utility function, largely because consumers seek to emulate each others' behavior. This paper provides estimates of a demand system for seven of the EEC countries which takes these Veblen effects into account as well as comparable estimates for some non-EEC European countries.