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An Empirical Analysis of Planned Obsolescence

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  • Toshiaki Iizuka

Abstract

This paper examines the decision to introduce new products by durable goods producers. Conventional wisdom suggests that durable goods producers introduce new products to kill off used products. However, used units may not compete with new units if initial price can capture the present value of all future transactions. Using new data from the textbook market, I find that publishers revise editions more frequently when competition from used textbooks increases. This suggests the presence of planned obsolescence. However, the time since the previous revision also significantly affects revision decisions, indicating that publishers' frequent revision cannot be attributed to planned obsolescence alone.

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  • Toshiaki Iizuka, 2007. "An Empirical Analysis of Planned Obsolescence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 191-226, March.
    • Handle: RePEc:bla:jemstr:v:16:y:2007:i:1:p:191-226
    DOI: 10.1111/j.1530-9134.2007.00137.x
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    References listed on IDEAS

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    Cited by:

    1. Blonigen, Bruce A. & Knittel, Christopher R. & Soderbery, Anson, 2017. "Keeping it fresh: Strategic product redesigns and welfare," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 170-214.
    2. Joseph Guiltinan, 2009. "Creative Destruction and Destructive Creations: Environmental Ethics and Planned Obsolescence," Journal of Business Ethics, Springer, vol. 89(1), pages 19-28, May.
    3. Jayarajan, Dinakar & Siddarth, S. & Silva-Risso, Jorge, 2018. "Cannibalization vs. competition: An empirical study of the impact of product durability on automobile demand," International Journal of Research in Marketing, Elsevier, vol. 35(4), pages 641-660.
    4. Susanna Esteban & Matthew Shum, 2007. "Durable-goods oligopoly with secondary markets: the case of automobiles," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 332-354, June.
    5. Eric W. Bond & Toshiaki Iizuka, 2014. "Durable Goods Price Cycles: Theory And Evidence From The Textbook Market," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 518-538, April.
    6. Ítalo Ruan Barbosa de Aquino & Josenildo Ferreira da Silva Junior & Patricia Guarnieri & Lucio Camara e Silva, 2020. "The Proposition of a Mathematical Model for the Location of Electrical and Electronic Waste Collection Points," Sustainability, MDPI, vol. 13(1), pages 1-15, December.
    7. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    8. Chen, Jiawei & Esteban, Susanna & Shum, Matthew, 2008. "Demand and supply estimation biases due to omission of durability," Journal of Econometrics, Elsevier, vol. 147(2), pages 247-257, December.
    9. Braganza, Oliver, 2022. "Market paternalism: Do people really want to be nudged towards consumption?," ifso working paper series 23, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    10. Shuya Yin & Saibal Ray & Haresh Gurnani & Animesh Animesh, 2010. "Durable Products with Multiple Used Goods Markets: Product Upgrade and Retail Pricing Implications," Marketing Science, INFORMS, vol. 29(3), pages 540-560, 05-06.
    11. Kanis Saengchote & Voraprapa Nakavachara, 2018. "Are consumers forward looking? Evidence from used iPhones," Applied Economics Letters, Taylor & Francis Journals, vol. 25(13), pages 905-909, July.
    12. Małgorzata Niklewicz-Pijaczyńska & Elżbieta Stańczyk & Anna Gardocka-Jałowiec & Zofia Gródek-Szostak & Agata Niemczyk & Katarzyna Szalonka & Magdalena Homa, 2021. "A Strategy for Planned Product Aging in View of Sustainable Development Challenges," Energies, MDPI, vol. 14(22), pages 1-20, November.
    13. Jeffrey Shulman & Anne Coughlan, 2007. "Used goods, not used bads: Profitable secondary market sales for a durable goods channel," Quantitative Marketing and Economics (QME), Springer, vol. 5(2), pages 191-210, June.

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