Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Durable Goods Theory for Real World Markets
Journal of Economic Perspectives
vol. 17,
no. 1, Winter 2003
(pp. 131–154)
(Complimentary)
Abstract
The early 1970s witnessed three major advances in durable-goods theory--Swan (1970, 1971) and Sieper and Swan (1973) on optimal durability, Coase (1972) on time inconsistency, and Akerlof (1970) on adverse selection. This paper surveys durable goods theory starting with these three contributions, where much of the focus is on recent literature and on models that explain real-world phenomena. In addition to the ideas found in the contributions of Swan, Coase, and Akerlof, topics covered include why producers sometimes practice "planned obsolescence," the role of adverse selection in new-car leasing, and reasons for aftermarket monopolization.Citation
Waldman, Michael. 2003. "Durable Goods Theory for Real World Markets ." Journal of Economic Perspectives, 17 (1): 131–154. DOI: 10.1257/089533003321164985JEL Classification
- L13 Oligopoly and Other Imperfect Markets
- L60 Industry Studies: Manufacturing: General
- L15 Information and Product Quality; Standardization and Compatibility
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