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Hartl_Kort_Wrzaczek_2022.pdf

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http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/96629 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/96629 http://eprints.org/relation/issmallThumbnailVersionOf https://pure.iiasa.ac.at/id/document/96629 archive 353 disk0/00/01/77/54 2022-01-17 10:58:51 2024-01-25 15:37:03 2022-01-17 10:58:51 article show Hartl R.F. Kort P.M. Wrzaczek S. 9380 pub EF Planned obsolescence; warranty; product life cycle; quality management; optimal control; vintage structure 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. 2023 published Taylor & Francis 10.1080/00207543.2021.2020929 3362 public International Journal of Production Research 61 9399-954 TRUE 0020-7543 no info:eu-repo/semantics/article