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Cannibalization vs. competition: An empirical study of the impact of product durability on automobile demand

Dinakar Jayarajan, S. Siddarth and Silva-Risso, Jorge

International Journal of Research in Marketing, 2018, vol. 35, issue 4, 641-660

Abstract: Many durable product categories have well developed and organized secondary markets that make it easy for consumers to purchase used versions in lieu of new ones. Manufacturers in these categories therefore face a dilemma in deciding on how much durability to build into their new products. High durability levels increase the risk that future new product sales are lost to used versions (the cannibalization effect), but can also help the firm take sales from new and used versions produced by its rivals (the competition effect). However, there has been no empirical research to determine the relative sizes of these two effects.

Keywords: Durable goods; Secondary markets; Choice models; Durability (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ijrema:v:35:y:2018:i:4:p:641-660