Obsolescence of durable goods and optimal purchase timing

Ennio Stacchetti, Dmitriy Stolyarov

    Research output: Contribution to journalArticle

    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.

    Original languageEnglish (US)
    Pages (from-to)752-773
    Number of pages22
    JournalReview of Economic Dynamics
    Volume18
    Issue number4
    DOIs
    StatePublished - Oct 2015

    Keywords

    • Durable goods
    • Obsolescence
    • Technology adoption

    ASJC Scopus subject areas

    • Economics and Econometrics

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