Economics Essay Sample

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economics essay

Why Do Poor Cities Not Produce Luxury Goods?

Luxury goods are made in rich cities. Upmarket goods are a big contrast to the necessity goods of everyday life. Luxury products have high standards and costs for their production, and also have specific customers with high income. Because of the these two reasons, poor cities do not produce luxury goods easily.

Often, luxury products are requested by the city-market with high income, and are willing to pay for high-quality goods. More rich you are, the more you buy luxury products. So, a poor worker that lives in Dakar[1] city, where he has a high level of poverty, does not have the capability to consume a luxury good,  thus his city will not offer it. His city will rely on agriculture and fishing, so that the citizens can have the main products that are a necessity for everyday life.
Moreover, producing a high quality product costs money. Poor cities do not have the economic power to manufacture luxury goods[2]. High and classy cars such as Ferrari, need a high quality manufacturer to be built. In addition, competing with a high quality leather clothes brand in Italy, with India for example, is also related to the ethic market. A high quality product has to start extending in his own country before competing worldwide. People that follow the luxury market, will follow the origin country and his success.

In conclusion, luxury products need customers that demand a fancy life. High income customers often come from rich cities that have high productions and high salaries. The lake of these two factors in poor cities, make the production of luxury goods very difficult. However, luxury products always stay relative to their demand. If collectives of expensive motorcycles stop their collection, and start buying cars only, then expensive motorcycles such as Harley lose their value as luxury goods.

Works Сited

1. Mary Plunkett, “The 10 Poorest Cities in the World”, The Poorest, 3 Oct. 2014.
2. Jonathan Dingel, “The Determinants of Quality Specialization,” Review of Economic Studies, (2016) 01, 1–35