Planned obsolescence

For other uses, see Planned obsolescence (disambiguation).

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In economics and industrial design, planned obsolescence (also called built-in obsolescence or premature obsolescence) is the concept of policies planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain predetermined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable.[1] The rationale behind this strategy is to generate long-term sales volume by reducing the time between repeat purchases (referred to as "shortening the replacement cycle").[2] It is the deliberate shortening of the lifespan of a product to force people to purchase functional replacements.[3]

Planned obsolescence tends to work best when a producer has at least an oligopoly.[4] Before introducing a planned obsolescence, the producer has to know that the customer is at least somewhat likely to buy a replacement from them in the form of brand loyalty. In these cases of planned obsolescence, there is an information asymmetry between the producer, who knows how long the product was designed to last, and the customer, who does not. When a market becomes more competitive, product lifespans tend to increase.[5][6] For example, when Japanese vehicles with longer lifespans entered the American market in the 1960s and 1970s, American carmakers were forced to respond by building more durable products.[7]

  1. ^ Bulow, Jeremy (November 1986). "An Economic Theory of Planned Obsolescence" (PDF). The Quarterly Journal of Economics. 101 (4). Oxford University Press: 729–749. doi:10.2307/1884176. JSTOR 1884176. S2CID 154545959. Archived from the original (PDF) on July 19, 2020.
  2. ^ Bidgoli, Hossein (2010). The Handbook of Technology Management, Supply Chain Management, Marketing and Advertising, and Global Management. Wiley. p. 296. ISBN 978-0470249482.
  3. ^ Giles Slade (2006), "Made to Break: Technology and Obsolescence in America", Harvard University Press, p5.
  4. ^ Orbach, Barak (2004). "The Durapolist Puzzle: Monopoly Power in Durable-Goods Market". Yale Journal on Regulation. 21: 67–118. SSRN 496175.
  5. ^ Bulow, Jeremy (November 1, 1986). "An Economic Theory of Planned Obsolescence". The Quarterly Journal of Economics. 101 (4): 729–750. doi:10.2307/1884176. hdl:10419/262438. ISSN 0033-5533. JSTOR 1884176.
  6. ^ Hadhazy, Adam. "Here's the truth about the 'planned obsolescence' of tech". Retrieved July 13, 2018.
  7. ^ Dickinson, Torry D.; Schaeffer, Robert K. (2001). Fast Forward: Work, Gender, and Protest in a Changing World. Rowman & Littlefield. pp. 55–6. ISBN 978-0-7425-0895-8.