We study the features of the incentives for investing in capital goods with higer durability. We argue that economies which invest in capital goods with less durability may have a lower economic growth. We build a theoretical model with endogenous depreciation rate. The model we present is one...

Most individuals at one time or another purchase and trade in an automobile. The automobile dealer and the buyer typically discuss what the trade-in value of the old car is. Also, they may talk about what the trade-in value of the new car will be in several years. In both cases a decline in...