Globalization, defined as "growing interdependence of the world's economies, cultures, and populations" can be intended as a process leading to a borderless world, where national cultures mix, financial resources and capabilities flow across states, ideas exchange among people and contribute to generate citizens of the world. Thus, in the era of globalization, that about 258 million people were living outside their country of birth in 2017 comes with no surprise. Rather, it sounds paradoxically that, at the same time, nationalism is back. The economic effects that the coexistence of these two conflicting phenomena can determine are a priori unpredictable. Disentangling them is the object ot the current research project.
Our analysis emcompasses three main considerations. The entry point is that in many cases, the "person's sense of self", the so called identity contributes to guide the economic agents' choice. Also, it is well known that in a globalized economy with goods made worldwide available, consumers are segmented by firms through quality differentiation of products. On the one hand, this quality differentiation allows firms to escape from the Bertrand paradox, which traditionally emerges in a price competition game with homogeneous products. On the other hand, consumers, when choosing certain products, satisfy their social needs: a luxury brand confers to her/his buyer prestige and esteem among peers, thereby distinguishing her/him from those who cannot afford the same luxury items. In some circumstances, the symbolic content of goods are even more relevant than their intrinsic quality and consumption is changed in a conspicuous practice. Finally and in contrast with the second ingredient of our analysis, the resurgence of nationalism pushes forward the idea of national identity and somehow justifies strict immigration laws, import quotas and tariffs as a means to preserve the traditional values of a country.
These considerations inspire our analysis.
