van Binsbergen, Jules2023-05-222018-02-222016-02-222016-06-22https://repository.upenn.edu/handle/20.500.14332/34339I study asset prices in a general equilibrium framework in which agents form habits over individual varieties of goods rather than over an aggregate consumption bundle. Goods are produced by monopolistically competitive firms whose elasticities of demand depend on consumers' habit formation. Firms that produce goods with a high habit level relative to consumption have low demand elasticities, set high prices for their product, have low expected returns on their stock and have low asset pricing betas and stock return volatilities. I find supportive evidence for these predictions in the data.This is the peer reviewed version of the following article, which has been published in final form at http://dx.doi.org/10.1111/jofi.12397. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.FinanceFinance and Financial ManagementArticle