Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86078
Authors: 
Berden, Koen G.
van Marrewijk, Charles
Year of Publication: 
2001
Series/Report no.: 
Tinbergen Institute Discussion Paper 01-060/2
Abstract: 
We analyze the impact of obsolescence of economic inventions by incorporating maintenance costsin the endogenous growth model of expanding product varieties. This contrasts with the existingliterature, which ignores maintenance costs and uses the model of quality improvements todescribe obsolescence. If the maintenance costs become too high, the operating profits becomenegative and the firm stops producing the variety. This diminishes the life span of innovations,thus reducing the return on investment in research and development and the growth rate of theeconomy.
Subjects: 
endogenous growth
obsolescence
maintenance
innovation
variety
JEL: 
F43
O31
O33
O41
Document Type: 
Working Paper

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