Monday, March 09, 2015

Is France Obselete?

An amazing law, even by French standards.  My good friend Petr Barton at IREF gives the details...

A summary paragraph:

The French government is hoping to help consumers – and increase growth – by making it illegal to manufacture products with artificially shortened lifetime. We argue that proving such case will be nearly impossible in modern technology and the ban will act as a tax, with consequences even worse than the status quo. If governments want to artificially boost production, they should in fact subsidise products with shortened lifetime, instead of banning them. 

 Of course, better still to leave things alone.  The key to the above paragraph is the word "artificially," the point being that this law doesn't even succeed on its own cockeyed terms.  Amazing.

I should note that Petr's blog is generally quite insightful.  You might follow him on Twitter at @iref_eu .  Some nice detail on economic problems in Europe.  The piece on Greek debt payments was surprising to me....I guess I bought the propaganda.  But it turns out that Greece is not "crippled" after all.


Paul Gowder said...

Hold on though. There's a way of looking at planned obsolescence that the linked post doesn't consider.

Suppose a firm can, for the same cost, make products that last for three years or for five years. And suppose consumers can't observe durability,* but firms can observe the durability of their competitors. Then isn't there an obvious equilibrium in which everyone chooses the three-year durability, and there's no competitive advantage to switching?

*maybe the goods are cheap enough, and they discount the future highly enough, that they aren't willing to invest in attending to durability over time, for example. If consumers are sufficiently unable to observe durability it might even be possible to outright defraud them.

Anonymous said...

Good point, though the article does say that one of the conditions for PO to survive, consumers must be foolable.. (unable to observe...) - and producers must be able to coordinate in a cartel. Which is pretty much what you are suggesting here.

Still, even under your conditions the cheater may break up the equilibrium if he can invest in a credible signal to "unfool" the customers and show them that theirs is a 5year product..