Property Rights and Planned Obsolescence

We examine how varying the property rights affects the adoption of technologies and the compatibility between products with demand side and supply side economies of scale. In this environment, we obtain the following results. First, the social welfare is maximized by having all consumers use the same technology in the second period. Second, strong property rights may induce the dominant firm to introduce socially inefficient compatible technologies. Third, weak property rights may accelerate planned obsolescence. Finally, under weak property rights, openness of forward compatibility may prevent monopolist from implementing planned obsolescence.