A simple linear demand two-period durable goods is analyzed where the durable good is provided by private non-profit organization (NPO). A novel flexible objective function is utilized that allows for both the “commercial” and “social concern” aspects of NPOs. The model indicates NPO’s will not typically provide the efficient cost-minimizing durability in sales markets. Indeed, if the NPO cannot credibly commit to its own stakeholders it will manufacture output with less durability than a pure for-profit seller. We show the NPO’s level of commitment ability and social concern with its stakeholders is crucial for determining the amount of “planned obsolescence” that would prevail if NPOs expand into durable goods markets. Interestingly, the social concern commonly cited for the existence of NPOs, is a double edged sword since it may cause more or less product obsolescence.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number
2006-16.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Did you know? You can include your works in the database easily by uploading them on the Munich Personal RePEc Archive (MPRA) if you do not have access to an institutional RePEc archive.