DESIGN INNOVATION AND FASHION CYCLES

A model of fashion cycles is developed in which designs are used as a signaling device in a ''dating game. ''A monopolist periodically creat es a new design. Over time the price of the design falls as it spreads across the population. Once sufficiently many consumers own the desig n it is profitable to create a new design and thereby render the old d esign obsolete. The paper gives conditions under which all consumers w ould be better off by banning the use of fashion. Competition among de signers may lead to less frequent changes in fashion and to higher pri ces than monopoly.