Are Strong Bandwagon Effects Really Unstable?

We analyze the features and stability properties of bandwagon effects in consumption patterns in a partial equilibrium framework. Generally, strong bandwagon effects are considered of limited applicability because of their instability. In this paper, we show that when they occur, the system actually converges to extreme solutions in which either nobody or everybody consumes the good using the overall budget. The approach to one of these extreme solutions depends on the intial "critical mass" of consumption: if the initial consumption level is low, nobody will consume the good, whilst if the initial level is high, everybody will buy the good in large amounts. On the contrary, weak bandwagon effects always converge to interior solutions. We can interpret this results as a rigorous microfoundation of multiple equilibrium theory in consumption.