Unanticipated shocks and the maintenance and replacement of durable goods

Richard Arnott*, Russell Davidson, David Pines

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper investigates how a durable-goods owner responds to a once-for-all unanticipated shock in a stationary state market. This problem is examined in the context of housing. The circumstances are determined under which a landlord will respond in each of the following five ways: (i) abandon his building immediately; (ii) run down his building optimally and then abandon; (iii) operate his building forever; (iv) demolish his building immediately, and reconstruct a new building on the site; and (v) run down his building, demolish it, and reconstruct a new building on the site. The analogous cases for other durable goods should be obvious.

Original languageEnglish
Pages (from-to)99-115
Number of pages17
JournalJournal of Economic Dynamics and Control
Volume8
Issue number1
DOIs
StatePublished - Oct 1984

Fingerprint

Dive into the research topics of 'Unanticipated shocks and the maintenance and replacement of durable goods'. Together they form a unique fingerprint.

Cite this