WHAT DEFINES LUXURY ?

Market characteristics
Luxury goods are said to have high income elasticity of demand: as people become wealthier, 

they will buy more and more of the luxury good. This also means, however, that should there 

be a decline in income its demand will drop. Income elasticity of demand is not constant with 

respect to income, and may change sign at different levels of income. That is to say, a luxury 

good may become a normal good or even an inferior good at different income levels, e.g. a 

wealthy person stops buying increasing numbers of luxury cars for his automobile collection 

to start collecting airplanes.
(at such an income level, the luxury car would become an inferior good).[citation needed]

Some luxury products have been claimed to be examples of Veblen goods, 
with a negative price elasticity of demand: for example, making a perfume more 
expensive can increase its perceived value as a luxury good to such an extent that sales can 
go up, rather than down.

Although the technical term luxury good is independent of the goods' quality, they are generally 
considered to be goods at the highest end of the market in terms of quality and price. Classic 

luxury goods include haute couture clothing, accessories, and luggage. Many markets have a 

luxury segment including, for example, automobile, yacht, wine, bottled water, tea, foods, 

watches, clothes, jewelry, and high fidelity.

Luxuries may be services. The hiring of full-time or live-in domestic servants is a luxury 

reflecting disparities of income. Some financial services, especially in some brokerage houses, 

can be considered luxury services by default because persons in lower-income brackets generally 

do not use them.

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