Week 3 – Lesson 2: Three products with an upward-sloping demand curve (real cases)
In some markets, a higher price can increase demand because price acts like a signal of status, exclusivity, or rarity. Below are three products where this effect can be observed in real life.
1) Hermès Birkin bags (luxury handbags)
Birkin bags are strongly linked to scarcity and prestige. The market treats them as exclusive assets, and higher prices can make them even more desirable (including in resale/investment contexts).
Source (case evidence): BagHunter – Hermès Birkin Values Research Study baghunter.com
Reference: https://baghunter.com/pages/hermes-birkin-values-research-study
2) Rolex watches (luxury watches with scarcity/waiting lists)
Rolex is a well-known case where restricted availability and high pricing reinforce desirability. Even when prices rise, demand and resale premiums can remain strong because the brand signals exclusivity.
Source (case evidence): Hodinkee – Artificial Scarcity, Rolex Availability… Hodinkee
Reference: https://www.hodinkee.com/articles/artificial-scarcity-rolex-availability-and-value-sub-brands-your-watch-business-questions-answered
3) Limited-edition sneakers (resale market premiums)
Limited-edition sneakers often sell for large premiums on resale markets. Higher prices can increase desirability because they signal rarity and cultural status, attracting collectors and status-driven buyers.
Source (case evidence): Investopedia – The Economics Behind Sneakers Investopedia
Reference: https://www.investopedia.com/articles/investing/030716/economics-behind-sneakers-nke-addyy.asp
Conclusion: In all three examples, price works as a signal of prestige, scarcity, and perceived quality rather than acting as a barrier to demand. This reflects the psychology of pricing discussed in the reading, where higher prices can increase desirability by reinforcing exclusivity and status.
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