Promotions and product pricing: Parsimony versus Veblenesque demand

The veracity of the parsimonious law of demand has long been challenged by analyses of the “Veblen effect” and “prestige pricing”. Backward bending “demand” curves often attend discussions of conspicuous consumption. Probing the sociological and psychological intricacies of potential consumer interdependencies, scholars in economics and marketing have overlooked mundane product promotions. For a monopolistic firm, we formalize the relationship between the optimal price/quantity combination and the thoroughness of product promotions. Iterating toward the profit maximizing thoroughness of product promotion, gives rise to a backward bending price/quantity locus. Challenges to the law of demand that ignore product promotions are thereby undercut.