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Obsolescence of Durable Goods and Optimal Purchase Timing

Author

Listed:
  • Ennio Stacchetti

    (New York University)

  • Dmitriy Stolyarov

    (University of Michigan)

Abstract

We study a model with a durable good subject to periodic obsolescence and analytically characterize the optimal purchasing policy. The key result is that consumers optimally synchronize new purchases with the innovation cycle. The model simultaneously explains coordinated adoption without invoking network effects and provides a theoretical underpinning for a diffusion curve that features a temporary adoption slowdown. (Copyright: Elsevier)

Suggested Citation

  • Ennio Stacchetti & Dmitriy Stolyarov, 2015. "Obsolescence of Durable Goods and Optimal Purchase Timing," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 752-773, October.
    • Handle: RePEc:red:issued:13-270
    DOI: 10.1016/j.red.2015.07.002
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    References listed on IDEAS

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    Cited by:

    1. Casalis, André & Krustev, Georgi, 2022. "Cyclical drivers of euro area consumption: What can we learn from durable goods?," Journal of International Money and Finance, Elsevier, vol. 120(C).

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    More about this item

    Keywords

    Obsolescence; Durable goods; Technology adoption;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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