This paper presents a model where agents decide on the timing of replacement of ageing machines. The optimal replacement policy for an agent is influenced by other agents' decisions because the productivity of a particular vintage displays network externalities that set... View more
17Recall that tˆN is defined by the maximum value of t satisfying F (0, N) ≤ F (t, N). This is the oldest age of the machine that gives an agent at least the same payoff as a new machine. Note that for N < nl, tˆN = 0.
18See for example Krugman(1991) and Matsuyama(1991), and closer to this model, the results in Cooper and Haltiwanger (1992) and Shleifer(1986)