Live fast, die young? Investigating product life spans and obsolescence in an agent-based model

This article presents an agent-based simulation model that explores the dynamics of product life spans. The objective of this modeling exercise is to investigate the interplay between technological change and product life span in extended industrial dynamics. Change in product characteristics is driven by an endogenous stochastic process relying on the interplays between heterogeneous consumers and firms. Special attention is paid to demand-side modeling, which allows analyzing more thoroughly how decisions of bounded rational consumers affect the dynamics of the system. Although most existing models on product life span investigate durable goods monopolists, our study highlights the notion that diversity matters. Diversity of supply and demand in a bounded rationality context can push firms to market products with longer life spans, but their diffusion is restrained by the sensitivity of consumers to product obsolescence and their willingness to pay for longer-lasting products. The dynamics of consumer preferences influenced by firm marketing activities tend to maintain this situation which contributes to locking the market into short product-life trends. Unlocking the system requires changes in consumer behavior and better information about product life span and cost per use for consumers.