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Durability of consumption goods and market competition: an agent-based modelling

Eric Brouillat ()

Cahiers du GREThA (2007-2019) from Groupe de Recherche en Economie Théorique et Appliquée (GREThA)

Abstract: This paper presents an agent-based simulation model that explores the dynamics of product lifetimes on a competitive market. The main objective of this modelling exercise is to investigate the conditions under which product-life extension strategies can be effective. In this model, change in products’ characteristics is driven by an endogenous stochastic process relying on the interplays between heterogeneous consumers and firms. The main contribution of the paper is to present a detailed modeling of demand which enables to analyze more thoroughly how decisions of bounded rational consumers impact on the dynamics of the system and, more particularly, how purchase process shapes market selection and strategies of firms. While most existing literature on product lifetime investigates durable goods monopolists, our study highlights that competition and diversity matter. The coexistence of competing products with different lifetimes can encourage firms to market long lifetime products. Our results also stress the critical role played in market dynamics by the processes driving purchase decision. The purchasing behavior of consumers in itself will greatly guide firms’ strategies and in fine shape market structure.

Keywords: industrial dynamics; obsolescence; product durability; product lifetimes; simulation model; sustainable consumption (search for similar items in EconPapers)
JEL-codes: O33 D11 D21 Q57 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cmp, nep-com and nep-mkt
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Working Paper: Durability of consumption goods and market competition: an agent-based modelling (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:grt:wpegrt:2011-31

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