Durable Goods Defined

Cite this article as:"Durable Goods Defined," in The Business Professor, updated November 24, 2018, last accessed November 26, 2020, https://thebusinessprofessor.com/lesson/durable-goods-defined/.


Durable Goods Defined

The goods which are not consumed or destroyed by use and last for a long time are called durable goods. Home appliances, types of machinery, cars all fall under the category of durable goods. Generally, consumer goods which last for 3 or more years are considered to be durable goods.

Foods, cosmetics, toiletries, cigarettes, beverages are all non-durable goods as those that perish with use. Durables, on the other hand, have an extended product life and you can use it for long without consuming the whole thing. Durable goods are not required to be purchased as frequently as the nondurables. It is better to spend the income in buying durable, capital, and investment goods, as they retain their economic value for longer. Increased expenditure on durables indicates sustainable economic growth. The wealth of an individual is preserved by spending more on durables.

References for Durable Goods

Academic Research on Durable Goods

  • ‚󏬆¬†¬†¬†¬† Some statistical models for limited dependent variables with application to the demand for¬†durable goods, Cragg, J. G. (1971).¬†Econometrica: Journal of the Econometric Society, 829-844. Several models for limited dependent variables (variables having a non-negligible probability of exactly equaling zero) are examined. Estimation in and discrimination among the various models are considered, followed by a small sampling experiment into the procedures and an example of their application.
  • ‚󏬆¬†¬†¬†¬† Durablegoods¬†monopolists, Bulow, J. I. (1982). Journal of political Economy,¬†90(2), 314-332. This article examines the different problems faced by a durable-goods monopolist in the retail sector.
  • ‚󏬆¬†¬†¬†¬† Rational expectations and¬†durable goods¬†pricing, Stokey, N. L. (1981). The Bell Journal of Economics, 112-128. This research examines the market for a durable good sold by a monopolist by using both continuous-time and discrete-time versions of the same model with respect to equilibrium requirements,especially the fulfillment of buyers‚Äô expectation.
  • ‚󏬆¬†¬†¬†¬† Cross-national analysis of diffusion of consumer¬†durable goods¬†in Pacific Rim countries, Takada, H., & Jain, D. (1991). The journal of marketing, 48-54. This article examines the effects from the use of the Bass new product growth model in the Pacific Rim markets. It goes on to propose different insights that may serves as a guideline for the creation of effective marketing strategies for the introduction of new products in the Pacific Rim markets.
  • ‚󏬆¬†¬†¬†¬† Measuring intertemporal substitution: The role of¬†durable goods, Ogaki, M., & Reinhart, C. M. (1998). Journal of political Economy,¬†106(5), 1078-1098. In estimating the intertemporal elasticity of substitution, Hall finds that, when one takes account of time aggregation, point estimates are small and not significantly different from zero. Applying improved inference methods to an economic model similar to Hall’s, Hansen and Singleton show that there is considerably less precision in the estimation. We reject this conclusion, and thus, go on to propose a new system/procedure which agrees with Hall’s model.
  • ‚󏬆¬†¬†¬†¬† Hall’s consumption hypothesis and¬†durable goods, Mankiw, N. G. (1982).¬†Journal of Monetary Economics,¬†10(3), 417-425. This article addresses Hall‚Äôs consumption hypothesis in the context of durable goods conscumption.
  • ‚󏬆¬†¬†¬†¬† Cyclic pricing by a¬†durable goods¬†monopolist, Conlisk, J., Gerstner, E., & Sobel, J. (1984). The Quarterly Journal of Economics,¬†99(3), 489-505. In the model of this paper, a monopoly seller of a durable good holds periodic sales as a means of price discrimination. We wish to explore this monopolist’s attitude towards price changes, in relations to consumers‚Äô willingness to buy durable goods, and the agreed purchase timeframe.
  • ‚󏬆¬†¬†¬†¬† Reputation in bargaining and¬†durable goods¬†monopoly, Ausubel, L. M., & Deneckere, R. J. (1989).¬†Econometrica: Journal of the Econometric Society, 511-531. This paper analyzes durable goods monopoly in an infinite-horizon, discrete-time game. It aims to show that as the time interval between successive offers approaches zero, all seller payoffs between zero and static monopoly profits are supported by subgame perfect equilibria.
  • ‚󏬆¬†¬†¬†¬† New Keynesian models,¬†durable goods, and collateral constraints, Monacelli, T. (2009).¬†Journal of Monetary Economics,¬†56(2), 242-254. This article provides an economic analysis of the effect of monetary shocks on durable and non-durable goods
  • ‚󏬆¬†¬†¬†¬† The¬†durable goods¬†monopolist and consistency with increasing costs, Kahn, C. (1986). Econometrica: Journal of the Econometric Society, 275-294. This paper derives the equilibrium behavior of a monopoly producer of a durable good in a continuous time framework. This study proves that the original Coase intuition regarding the efficiency of the monopoly producer of a durable good only holds in the case of constant marginal costs.
  • ‚󏬆¬†¬†¬†¬† The effects of religious factors on perceived risk in¬†durable goods¬†purchase decisions, Delener, N. (1990). Journal of Consumer Marketing,¬†7(3), 27-38. This paper investigates the impact of religion on consumers when it comes to decision-making. Results show that religious individuals tend to perceive higher risks in their purchase decisions.

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