Planned obsolescence

Planned obsolescence (also built-in obsolescence (UK)) is the conscious decision on the part of an agency to produce a consumer product that will become obsolete in a defined time frame. Planned obsolescence has great benefits for a producer in that it means a consumer will buy their product repeatedly, as their old one is no longer functional or desirable. It exists in many different products from vehicles to lightbulbs, from buildings to software. There is, however, the potential backlash of consumers that become aware of such obsolescence; such consumers can shed their loyalty and buy from a company that caters to their desire for a more durable product.

Economics of planned obsolescence

Planned obsolescence tends to work best when a producer has at least an oligopoly. Before introducing a planned obsolescence the producer has to know that the consumer is at least somewhat likely to buy a replacement from them. In these cases of planned obsolescence there is an information gap between the producer, who knows how long the product was designed to last, and the consumer, who does not. Planned obsolescence is thus considered by many to be one of the inefficiencies of a monopoly. When a market becomes more competitive, product lifespans tend to increase. When Japanese and European vehicles with longer lifespans entered the American market in the 1960s and 1970s, the American carmakers were forced to respond by building more durable products.

Related Topics:
1960s - 1970s

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However, there are some industries where there is significant competition and consumers have chosen to go for products that will fail more quickly anyway. For instance, lightbulbs that last many years can easily be made for a price that would be considerably lower per hour of lifetime than conventional ones. These bulbs are used by almost all businesses and industries. Homeowners, however, tend to balk at paying two or three times as much even when it might save them money in the end. Some consumers are also perfectly content with planned obsolescence. The buildings housing suburban box stores such as Walmarts and Home Depots are not built to last any longer than twenty-five years. In this instance the retailers want the cheapest buildings possible. Stores are relocated or redesigned often enough that a longer lifespan would be useless to the storeowner.

Related Topics:
Lightbulbs - Box store - Walmart - Home Depot

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Even in a situation where planned obsolescence is appealing to both producer and consumer there can also be significant harm to society in the form of negative externalities. Continuously replacing, rather than repairing products, creates more waste, pollution, and uses more natural resources.

Related Topics:
Negative externalities - Waste - Pollution - Natural resource

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Others have defended planned obsolescence as a necessary driving force behind innovation and economic growth. Many products, such as DVDs, become both cheaper and more useful the more people have them. Would DVD players have been adopted as quickly, or even at all, if VCRs didn't break irreparably after three years? Planned obsolescence will also tend to benefit those companies with the most modern and up-to-date products, thus encouraging extra investment in research and development that often has large positive externalities. There is a tendency for people towards conservatism in their purchases, a predilection some economists believe to be excessive and harmful to the economy. These economists would argue, for instance, that Microsoft's efforts to encourage consumers to move from Windows 95 to Windows XP by withdrawing support and interoperability for the older operating system is a necessary corrective to people's natural aversion to change.

Related Topics:
DVD - VCR - Research and development - Windows 95 - Windows XP

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