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Public interest in the durability of household appliances may be traced back 40 years to criticism of planned obsolescence raised by all emerging consumer movement. A recent revival of interest in product life spans has taken place in the context of increasing waste generation and debate prompted by proposed producer responsibility legislation, but data on the age of discarded products and consumer attitudes to product life spans have been lacking. This paper draws upon recent data from research into discarded household appliances in the UK to enhance a theoretical model of product obsolescence and explore some implications for marketing and public policy. A survey of over 800 households provided quantitative data on consumer attitudes and behaviour relating to appliance life spans and a subsequent series of focus groups enriched this data with personal narratives. Respondents were evenly divided on whether or not appliance life spans are adequate. Variations in behaviour demonstrated how users may influence appliance life spans. Overall, the results suggest that consumers have an important role in reversing the trend toward increased appliance waste but currently face economic disincentives and lack adequate product information.

Byline: Per Krusell (1) Keywords: investment; R and D; planned obsolescence Abstract: The relative price of capital has declined at a rapid rate in the postwar period.This article provides a candidate explanation for this relative price decline--research and development that are embodied in new, more efficient investment goods. The model mimics the secular aspects of the data, and it has the property that the long-run growth rate of consumption is nontrivially determined as a function of the R and D efforts. Because growth is driven by investment in durable goods in the present model, it seems natural to assume that R and D is product-specific and that the firms producing these goods are long-lived profit centers that internalize the dynamic gains from R and D. A result of this assumption is that the growth rate in the decentralized economy is too low: the so-called business stealing effects that may cause the equilibrium growth rate to be too high in other models is internalized here in the form of planned obsolescence. Author Affiliation: (1) Institute for International Economic Studies, and CEPR, University of Rochester, USA Article History: Registration Date: 28/09/2004

Keywords: endogenous growth; obsolescence; product innovation Abstract: The model in this article captures several important aspects of the real world: gradual obsolescence of goods in the form of gradually declining net profit derived from each product until it is phased out, expanding variety of goods over time, and both dynamic and static internal increasing returns to scale of production. To eliminate the scale effect, Jones's specification that gives rise to a semiendogenous rate of innovation is adopted. The most interesting finding of the article is that, when the research duplication effect is small (large) relative to the intertemporal knowledge spillover effect in R and D, the decentralized market delivers insufficient (excessive) obsolescence and allocates too little (much) labor to R and D, while a small subsidy (tax) to innovation is welfare-improving. All these results hold because the positive knowledge spillover externality overwhelms (is overwhelmed by) the negative research duplication externality. Article History: Registration Date: 28/09/2004

The new electronics technologies are propelling a transformation of value creation from being based on physical work to being based on knowledge creation. This is creating an economy increasingly based on innovation, but this means that the obsolescence is becoming increasingly rapid. Some products such as personal computers are now on a three-month product cycle meaning that even as value is being created more quickly, it is also being destroyed more quickly. Software is one of the quintessential products of this new economy. One of the central dilemmas of the knowledge economy is that the product knowledge often can be reproduced at essentially no cost. This means that it is difficult to enforce private property relationships creating a difficulty for private firms. Information and knowledge creation have already become the central pivot in capitalist economies and this will only be reinforced. (Reprinted by permission of the publisher.)

A stochastic dynamic programming model for computing the optimal ordering policy for a product which has the potential to be obsolete or perishable has been developed. The model considers products with a predetermined time-varying demand pattern over a planning horizon of N periods. Two heuristic methods are also proposed. However, the approaches are limited in the sense that they apply an 'all or nothing' philosophy to inventory obsolescence or spoilage at the end of each period.

Detractors of the capitalist system claim that manufacturers deliberately produce products with economically short lives to force consumers to repurchase frequently. However, a thorough analysis of this theory, otherwise known as 'planned obsolence,' shows that the fabrication of rapidly-deteriorating products promotes technological progress and fast innovations. On the other hand, durable products tend to result in a stagnant technological climate.

SUCCESSFULLY DEALING WITH TECHNOLOGICAL OBSOLESCENCE Computers have been a tremendous boon to the business community, but they have been a great source of consternation as well. One of the most [...]