A Veblen good is a good that oppose the law of demand. It is also known as positional good. People demand it more, when its price increases, Such goods are rare to find, however, it is only demanded when they are on offer. For example the sell of Island is now common these days by world's richest people. This market however is very small to cater for everyone. Snob effect explains the exclusive characteristic of such goods and why those people demand such. Then bandwagon effect which relates to psychological effect of a member who belongs to a certain group (i.e rich ranks in a country).

A Giffen good, now also violates the law of demand. However, this is only possible at lower levels of price. As more price is being attached, people will start to look for substitutes of the good. A giiffen good, requires the trade off of income effect and substitution effect. You can liken it to auctions, where people bid for a specific good (though this is a weaker form of the fact).

Giffen goods may not be scarce in any economy. While Veblen goods are highly scarce. However, the concept of scarcity, may involve artificial scarcity due to issue of property rights in any economy.

Bonga Wellington Garikai answer is good.  I might add a perspective and details for you to consider.  In the ideal world of theoretical economics, everything else remains constant except the independent variable, which is the price of the good (or service) in question when we are considering a demand curve. If multiple variables are changing, such as the price along with the consumer's perception of the quality (or snob appeal), the consumer's tastes, preferences, or similar things, then it is a stretch to suggest the price alone is responsible.  

When the price changes, we say there is movement from one point to a another point on the same demand curve.  This is different from a shift of the demand curve, which is due to a change in some variable other than the price (e.g., any of the ones mentioned above). 

Many so-called Giffen good examples are really shifts of the demand curve instead of movement along a stationary demand curve.  As Bonga Wellington Garikai mentions, the income and substitution effects are key.  Specifically, the income effect must be so powerful that it more than offsets the substitution effect.  The substitution effect is always consistent with the law of demand, or at least never inconsistent with it for a rational consumer.  For example, as the price of a good increases, the rational consumer will evaluate other things that potentially provide more marginal utility per unit of money spent. 

It is possible and likely that the damage to the consumer's purchasing power encourages the consumer to buyer fewer things as the price of a good increases; however, it is also possible that the consumer seeks more so-called inferior goods (i.e., those with a negative income elasticity of demand). For the Giffen paradox to exist, this income effect must dominate the substitution effect, which is moving in the opposite direction.  In order to dominate, the income effect would have to be for an extraordinarily inferior good (e.g., one with an income elasticity far from zero on the negative side).  It is theoretically impossible to have a Giffen good for an income neutral or normal good.  

Using indifference curves and budget lines reveals that this is possible only if the indifference curves are not parallel.  Recall that parallel indifference curves are consistent with a consumer who does not experience a change in tastes and preferences.  If the indifference curves do not remain roughly parallel, the consumer's preferences either violate the transitivity assumption or more is preferred to less.  This means multiple things have changed and not just the price.  In other words we have a shift of the entire demand curve and movement down (or up) ostensibly along a demand curve.

Most of the time when someone thinks he or she has found a Giffen good, it is actually a shift of the demand curve that has been confused with movement along a single (i.e., stationary) demand curve.  I hope this helps.  

Thanks a lot Bonga and Rob for the respective opinions shared. Your points are well noted and very much appreciated

Yes, I agree with David. In addition, it seems to me that (from the perspective of someone like me who has spent a lot of his time (45 years and counting) on the ground doing research with farmers around cities) what we also require is an analysis of the dynamics of different market segments. Indeed, it is often the case that one hears of the importance of investigating food production in what appear to be marginal forms of agriculture and farming (taking not only into account the produce and its characteristics but also the process used in producing them. And then, to pursue this a bit further, what appears at the margin (at least in farm food produce often becomes a key segment of production and the markets some years later. This is the case in many countries for  organically produced food produce, a phenomenon that, certainly in the Canadian and French context) that has prompted other farmers to more or less copy the certified organic producers and become involved more in direct selling (even via some supermarkets now) as some consumer segments purchase on the basis of personal knowledge of the farmers involved. 

Christopher

Hi Christopher, thanks a lot for the opinion shared. I however don't seem to understand what you are trying to pass across...could you elaborate on your point further? Best regards

David

Hello, David

I was just trying to look at what you were saying and asking from a farmer's and consumer's perspective, especially in peri-urban/rural-urban fringe territories where one of the major markets certainly in the countries I have worked in is represented by some segments of the urban consumer market.  In these contexts in developed countries over the last 20 ti 25 years, farm produce that used to be thought of as 'marginal' has become associated with an important market segment. And part of this market segment is made up of of poorer families; we have an example in Montréal where in one community social enterprise, better-off people pay more for quality produce (e.g. organically produced produce) which helps to reduce the price asked of poorer families who are also members of the same social enterprise.

Christopher 

Oh ok, I think I get your point now...Thanks so much Christopher for the clarification, Your point is well noted and very much appreciated.

David

I do agree with all the points discussed above, however, I add one more thing to this discussion is that the law of demand and its exceptions are based on consumers'behaviour; so long they behave rationally the law holds good so it is the distance between rational and irrational behaviour that keeps the difference between Veblen and Giffen goods.

Interesting. Thanks so much Dr. Arjun for the opinion shared. Your point is well noted and very much appreciated

Giffen good consumption is tied to habits and needs due in part to deeply-entrenched Pavlovian conditioning. It is unique to a particular group of people (usually drawn along the lines of either nationality, culture or ethnicity) for whom the consumption has become a part of tradition. In a sense an acquired taste. By contrast, a Veblen good is one that has been adopted by another group of people  (not usually confined to an ethnicity or nationality), for which the consumption constitutes an initiation into, or an adoption of a lifestyle that is consistent with upward social mobility.

Veblen goods may eventually become Giffen goods in some cases when the economic development of a country progresses to a stage where we begin to see economic classes cutting across cultural, social and ethnic divisions. There is however less likelihood for a current Giffen good to simultaneously attain to a Veblen good, since by definition a Giffen good is an inferior good that has low substitution effect. Staples/commodities do not impart Veblen effects for people being part of the same cultural/social milieus. Though after a time, an abandoned staple/inferior good from a bygone era may re-emerge as a healthier/chic, substitute for the staple/inferior good currently in use (e.g. vintage consumerism). Hence for a time, since it's supply is limited while its adoption is growing at a faster rate, its higher price together with its novelty accords to an upscale/healthier lifestyle. "Harking back to the good old days." 

Giffen goods are rare forms of inferior goods that have no ready substitute or alternative, such as bread, rice, and potatoes. The only difference between Giffen goods and traditional inferior goods is that demand for the former increases even when their prices rise, regardless of a consumer's income.