shah82 wrote:That's understood, and people should check the wiki, but I'm really talking about something more complex than that, and somewhat different than the classical description of a veblen good. After all, I'm not saying that people are buying Mansong teas because they are so rare and exclusive and you can impress people by serving Mansong tea so casually. I'm also not saying, but not quite definitively not so, that Dayi tea price rises because premium arbor tea has risen so much that people shrug and buy more Dayi at a higher price. What I am saying is that greater demand and higher prices is a result of a kind of close substitutes being available, in a way a continuum away from an actual Giffen good, by how it violates that particular condition necessary for a product to be a Giffen good. People buy fakes because they do want to keep up appearances, and to build up courage (and interest by other people) to buy the real/better tea. When it comes to Yunnan tea, where zillions of tons of good tea is grown, there is a ceaseless effort to improve the Veblen good aspect of whatever tea the marketer is selling, and the inferiority generated from failed aspirations drives the Veblen Excitement level of tea above a certain tier. The utility of buying fakes depends on how well the non-fakes score on the Veblen Excitement level, but that Veblen Excitement level is also dependent on how many fakes/lower quality items are out there in turn.
Hey, I'm just working a zebra with a curry comb, peeps are free to pick one up and groom a exotic animal or walk on by...
Heh, perhaps a short way to say it is that an actually rare potential Veblen Good needs help from substitutes that are directly linked to the original good to achieve a substantial phenomenon of higher prices driving higher demand. Think Bingdao. There are actually lots of gushu LBZ and Yiwu around, they don't need that much help being a name. Bingdao or Mansong does, given the very low production.
But I think you need to remember that the market for high end raw puerh has expanded exponentially as China has become increasingly wealthy. Ten or fifteen years ago really only folks in Hong Kong and some people in Taiwan were buying this stuff. The marketing machine for puerh in the past 10 years has been so successful such that everyone and their dog has gotten into the puerh craze, and China, being a big place with, now, a lot of wealthy people, can easily drive prices up to multiples of what it used to cost a mere few years ago because of increased demand, not because of abnormalities in the curvature of the demand curve in a particular good.
Of course for the very highest end, such as a pure old tree tea LBZ, there's a Veblen good aspect to the market. However, if anything, the real Veblen good market is not in new teas, which are by and large commodity markets with normal good demand curves. Rather, the Veblen goods are old teas from 30 years ago or more. Many such teas are in fact very inferior examples of poorly stored teas that can hardly beat my daily loose traditionally stored sheng pu, but command far higher prices because of the exclusivity factor (it's hard to brag about loose tea). At something like 2-3000 RMB a jin or so for real old tree tea new sheng puerh, the prices are not very different from high end oolongs or green teas. No Veblen good there.