Take Action

Home | Faculty & Research Overview | Research

Research Details

The Life Cycle of Products: Evidence and Implications, The Journal of Political Economy

Abstract

We exploit detailed product- and firm-level data about the consumer goods industry to document that the sales of individual products decline at a steady pace throughout most of the product life cycle. This pattern is common across heterogeneous types of products and is mostly explained by declines in quantities sold rather than declining prices. The results are consistent with products quickly becoming obsolete as they face competition from newer products sold by competing firms and competition from newer products sold by the same firm. We build and estimate a tractable dynamic model of firm growth in which firms invest in creating new products that impact both its own existing products and the products of competitors. Our model highlights an innovation-obsolescence cycle mechanism where firms need to introduce new products to grow; otherwise their portfolios become obsolete as rivals introduce new products of their own. By introducing new products, however, firms accelerate the decline in sales of their own existing products, further depressing sales of products over their life cycle. This mechanism has sizable implications on the quantifications of sources of economic growth and the impact of innovation policies.

Type

Article

Author(s)

Sara Moreira, Munseob Lee, David Argente

Date Published

2023

Citations

Moreira, Sara, Munseob Lee, and David Argente. 2023. The Life Cycle of Products: Evidence and Implications. The Journal of Political Economy.

LINK
KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more