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On the Limitation of Warranty Duration

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  • Emons, Winand

Abstract

This paper analyzes the frequently-observed phenomenon that firms offer product warranties that are of much shorter duration than the life expectancy of these products. It is shown that competitive equilibria may entail limitation of warranty duration if firms face adverse selection problems with respect to different consumers. Copyright 1989 by Blackwell Publishing Ltd.

Suggested Citation

  • Emons, Winand, 1989. "On the Limitation of Warranty Duration," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 287-301, March.
  • Handle: RePEc:bla:jindec:v:37:y:1989:i:3:p:287-301
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    Cited by:

    1. Emons, Winand, 2003. "A note on the optimal punishment for repeat offenders," International Review of Law and Economics, Elsevier, vol. 23(3), pages 253-259, September.
    2. Tim Friehe & Tobias Tröger, 2012. "Sequencing of remedies in sales law," European Journal of Law and Economics, Springer, vol. 33(1), pages 159-184, February.
    3. Emons, Winand, 2001. "Credence goods monopolists," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 375-389, March.
    4. David Hakes & Dongsoo Shin, 2008. "Warranties as a device to extract rent from low-risk users of a product," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 1-7.
    5. Giorgio Coricelli & Luigi Luini, 1999. "Double Moral Hazard: an Experiment on Warranties," CEEL Working Papers 9901, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    6. Li, Kunpeng & Chhajed, Dilip & Mallik, Suman, 2005. "Design of Extended Warranties in Supply Chains," Working Papers 05-0128, University of Illinois at Urbana-Champaign, College of Business.
    7. Thomas Eger, "undated". "Einige ökonomische Aspekte der Europäischen Verbrauchsgüterkauf - Richtlinie und ihrer Umsetzung in deutsches Recht," German Working Papers in Law and Economics 2002-1-1032, Berkeley Electronic Press.
    8. Lutz, Nancy A. & Padmanabhan, V., 1998. "Warranties, extended warranties, and product quality," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 463-493, July.
    9. McClure, James & Kumcu, Erdogan, 2008. "Promotions and product pricing: Parsimony versus Veblenesque demand," Journal of Economic Behavior & Organization, Elsevier, vol. 65(1), pages 105-117, January.

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