DURABLE GOODS' CHARACTERISTICS AND MARKETING PRACTICES RECONSIDERED Available to Purchase

A number of advances in the analysis of durability have appeared recently. There remain, however, some areas of misperception and inaccuracy with regard to the implications of durability. The purpose of this paper is to clarify two related issues. The first is the issue of which is most profitable under alternative market structures: selling a durable, renting the durable, or selling the services of the durable. Selling the services of the durable differs from renting the durable only in the case where intensity of use is variable. The role of intensity of use has been recently addressed by Epple and Zelenitz and it is their conclusions we wish to amplify. In particular, Epple and Zelenitz's conclusions (i.e., “Rental is not a viable policy under either [monopoly or competition] market structure,” (p. 286) and “However, sale of services would eliminate the costs of short term ownership in the same way as rental,”) are not as likely to be as true as they suggest.