| In economics, a Veblen good is a good with a positive price elasticity of demand. This means that when the price goes up, the quantity demanded also rises.
This is different from a Giffen good as the income effect is not involved. A short explanation is in order.
Most "goods" are what economists describe as having a "normal" negative price elasticity of demand. This means, as the price goes up, quantity demanded falls. This is because when something costs more, you are less likely to want to buy it.
Because we live in a complicated world, this is not always true. Sometimes, when the price of a product rises, the quantity people want to buy also increases.
As Teiresias explains well, in the case of a Giffen good, the income effect is greater than the substitution effect. Potatoes in the Irish famine were a Giffen good because so much of the income of poor Irishmen was dependant upon their price, that when the price of potatoes rose, the impoverished Irish could not afford anything but potatoes So they stopped buying everything else, and concentrated all their income on buying potatoes.
A Veblen good, on the other hand, does not involve an income effect as such, and concerns the very rich instead of the very poor. It is to do with status - people buy a Veblen good when its price rises to show they are rich. And they stop buying it when its price falls because it no longer conveys social status.
They are named after Thorstein Veblen due to his theories of conspicuous consumption. He argued that the spending of the super-rich elite had nothing to do with the use-value of the goods they buy, and was more to do with putting on a display to show of their wealth to their peers. Hence, they would buy things because their price and their uselessness made them conspicuous.
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