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Decisions To Replace Consumer Durables Goods: An Econometric Application Of Wiener And Renewal Processes

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  • Viviana P. Fernandez

Abstract

Current sales of most consumer durable goods 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 paper is an empirical study of household replacement decisions modeled as an optimal stopping rule. Using data from the Residential Energy Consumption Survey (RECS) of the U.S. Department of Energy, we conclude that demographic variables, operation and replacement costs, and equipment characteristics may affect ownership spells of appliances such as electric heaters and central air conditioners. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Viviana P. Fernandez, 2000. "Decisions To Replace Consumer Durables Goods: An Econometric Application Of Wiener And Renewal Processes," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 452-461, August.
    • Handle: RePEc:tpr:restat:v:82:y:2000:i:3:p:452-461
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    Cited by:

    1. Prince, Jeffrey T., 2009. "How do households choose quality and time to replacement for a rapidly improving durable good?," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 302-311, March.
    2. Shigeru Matsumoto & Hajime Sugeta, 2022. "Efficiency Investment and Curtailment Action," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(3), pages 759-789, November.
    3. A. Prinzie & D. Van Den Poel, 2007. "Predicting home-appliance acquisition sequences: Markov/Markov for Discrimination and survival analysis for modeling sequential information in NPTB models," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/442, Ghent University, Faculty of Economics and Business Administration.
    4. Jiaxing Wang & Shigeru Matsumoto, 2022. "An economic model of home appliance replacement: application to refrigerator replacement among Japanese households," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(1), pages 29-48, January.
    5. Viviana Fernández, 2002. "What Drives Replacement of Durable Goods at the Micro Level?," Documentos de Trabajo 122, Centro de Economía Aplicada, Universidad de Chile.
    6. Joseph Guiltinan, 2010. "Consumer durables replacement decision-making: An overview and research agenda," Marketing Letters, Springer, vol. 21(2), pages 163-174, June.
    7. Fernandez, Viviana P., 2001. "Observable and unobservable determinants of replacement of home appliances," Energy Economics, Elsevier, vol. 23(3), pages 305-323, May.
    8. Meade, Nigel & Islam, Towhidul, 2006. "Modelling and forecasting the diffusion of innovation - A 25-year review," International Journal of Forecasting, Elsevier, vol. 22(3), pages 519-545.
    9. Ken-Ichi Akao, 2017. "An economic analysis of the “Home Appliance Eco-Point System” in Japan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(3), pages 483-501, July.

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