Current sales of most consumer durables are accounted for by replacements. However, only in recent years has the economic literature provided a more rigorous analysis of replacement purchases by incorporating elements of dynamic programming, and of the theory of stochastic processes. This is an empirical study on the relationship between replacement rates, demographic factors, operation and maintenance costs, and characteristics of consumer durable goods. By using data from the "Residential Energy Consumption Survey" (RECS) of the Department of Energy of the United States, we conclude that those variables may affect ownership spells of appliances such as electric heaters and central air conditioners. This paper has two major contributions. First, it presents the first empirical study of determinants of appliance replacement comprising the whole United States. Second, it derives an econometric specification from a structural duration model by using elements of the theories of stochastic processes and renewal processes. In contrast, the empirical studies found in the current literature have utilised reduced-form models that are not derived from any optimatization process.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Find related papers by JEL classification: D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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