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An investment model of durable good diffusion

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Abstract

Existing studies that deal with the diffusion of durable good innovations have been criticized for their lack of an explicit testable theory of new product growth. This paper attempts to remedy this situation by providing a theoretical model of market penetration of new durable goods derived from The basic assumption that potential users of the new intermediate product attempt to minimize costs. The resulting model defines a time path of short-run equilibrium market shares determined by the cost characteristics of both the new innovation and the equipment that it is designed to replace, the age distribution of the existing capital stock, and the growth rate of the adopting sector.

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Authors and Affiliations

  1. Jerry Jackson Associates, P.O. Box 2466, 27515, Chapel Hill, NC, USA

    Jerry R. Jackson

  2. Department of Economics, Auburn University, 36849, Auburn, AL, USA

    David L. Kaserman

Authors
  1. Jerry R. Jackson
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  2. David L. Kaserman
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Jackson, J.R., Kaserman, D.L. An investment model of durable good diffusion. Rev Ind Organ 6, 199–214 (1991). https://doi.org/10.1007/BF00378122

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