Planned obsolescence

Giles Slade’s new book, Made to Break: Technology and Obsolescence in America made me want to list coherent microeconomic theories of planed obsolescence:

1. Consumer tastes change rapidly and so new models are needed frequently.

2. Old models become rapidly obsolete because of technical progress.

3. We are playing a durable goods monopoly game and suppliers want consumers to know they must buy the wasting asset now, rather than waiting for its price to fall.

4. Suppliers can’t credibly signal true durability, so the market standard ends up being a cheap, short-lasting good, sold at a relatively low price.

#1 and #2 are optimal and indeed splendid reasons to have planned obsolescence.  #3 is lame, and the time horizons for each decision don’t match up for this to be real.  #4 I can believe, but this implies too many light bulbs under the kitchen sink, or too many trips to K-Mart, rather than any great tragedy of consumer rip-off.

Here is an interview with Slade.  I found some useful material in his book, but no actual argument.


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