Reputation or warranty, what is more effective against planned obsolescence?
Hartl,Richard F. Kort,Peter M. Wrzaczek,Stefan
Hartl,Richard F.
Kort,Peter M.
Wrzaczek,Stefan
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.
Description
Date
2023-03
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
Planned obsolescence, warranty, product life cycle, quality management, optimal control, vintage structure, DESIGN
Citation
Hartl, R F, Kort, P M & Wrzaczek, S 2023, 'Reputation or warranty, what is more effective against planned obsolescence?', International Journal of Production Research, vol. 61, no. 3, pp. 939-954. https://doi.org/10.1080/00207543.2021.2020929
License
info:eu-repo/semantics/openAccess