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Firm Behavior and Product Durability

Authors
Publisher
Seoul Journal of Economics
Publication Date
Keywords
  • Two Period Model
  • Sales Market
  • Rental Market

Abstract

Traditional models of product obsolescence assume firms exhibit specific behavior. The simple two period model developed herein employs a conjectural variation framework to examine the sensitivity of sub-optimal durability within sales markets to behavioral assumptions. Even in sales markets. this model leads to two cases where efficient durability occurs and two cases where inefficient durability occurs.

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