 Reputation or warranty, what is more effective against planned obsolescence?Richard F. Hartl, Peter Kort and Stefan Wrzaczek International Journal of Production Research, 2023, vol. 61, issue 3, 939-954 Abstract: In determining the durability of its product a firm faces a trade off. Performing a policy of planned obsolescence by making their products less durable implies that the consumer needs to replace them earlier, which thus enhances demand. However, a lower quality of the product will result in a lower reputation, which in turn will affect demand negatively. In many cases, the government protects the consumer by implementing a warranty period. Our paper studies how a firm should optimally deal with this trade off and react to government policy. We obtain the following results. First, we find that the length of the warranty period has an inverted U-shaped effect on the product life time. Second, if more consumers are aware of the existence of a warranty period and ask for a free product replacement, this will increase the product life time. Third, increasing uncertainty about the breakdown of the product also has an inverted U-shaped effect on the product lifetime. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:61:y:2023:i:3:p:939-954 Ordering information: This journal article can be ordered from DOI: 10.1080/00207543.2021.2020929 Access Statistics for this article International Journal of Production Research is currently edited by Professor A. Dolgui More articles in International Journal of Production Research from Taylor & Francis Journals |
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