Different kinds of demand

A. Functional
B. Nonfunctional
1. External effects on utility
(a) Bandwagon effect
(b) Snob effect
(c) Veblen effect
2. Speculative
3. Irrational

Functional demand: the demand for a commodity is due to the qualities inherent in the commodity itself.

Nonfunctional demand: the demand for a consumers' good is due to the factors other than the quality inherent in the commodity. May be due to external effects of utility, that is, the utility derived from the commodity is enhanced or decreased owing to the fact that others are purchasing and consuming the same commodity, or owing to the fact that the commodity bears a higher rather than lower tag.

Bandwagon effect: (从众效果)
The extent to which the demand for a commodity is increased due to the fact that others are also consuming the same commodity.
It represents the desire of people to purchase something to conform with the people they wish to be associated with, in order to be fashionable or stylish.

Snob effect: （逆反效果）
The extent to which the demand for a consumers' good is decreased owing to the fact that others are also consuming the same commodity (or that others are increasing their consumption of that commodity). This represents the desire of people to be exclusive.

Veblen effect: （装逼效果）
The phenomenon of conspicuous consumption; to the extent to which the demand for a consumers' good is increased because it bears a higher rather than a lower price.

Difference of snob and veblen effect: the former is a function of the consumption of other buyers; the latter is a function of the price.


Speculative effect refers to the fact that people will often "lay in" / hoard a supply of a commodity because they expect its price to rise.

Irrational effect refers to purchases that are neither planned not calculated but are due to sudden urges, whims, etc, and that serve no rational purpose but that of satisfying sudden whims and desires.