A theory of economic obsolescence

Lee, I.H. and Lee, J. (1998) A theory of economic obsolescence. Journal of Industrial Economics, 46, (3), 383-401. (doi:10.1111/1467-6451.00077).


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Original Publication URL: http://dx.doi.org/10.1111/1467-6451.00077


A new generation of durable goods makes an old generation economically, even if not physically, obsolete. Economic obsolescence due to technological innovation requires the durable goods monopolist to implement price discrimination in two dimensions, both between consumers with different valuations and between consumers with different purchase histories. Equilibrium in the game between the durable goods monopolist and consumers depends on the extent of economic obsolescence and the relative sizes of the consumer groups. Underinvestment in innovation may take place. This contrasts with the standard literature on planned obsolescence where the durable goods monopolist overinvests in durability reducing technology.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1111/1467-6451.00077
ISSNs: 0022-1821 (print)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 32986
Accepted Date and Publication Date:
Date Deposited: 21 Jun 2007
Last Modified: 06 Aug 2015 02:30
URI: http://eprints.soton.ac.uk/id/eprint/32986

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