Conflicting consequences of price-induced product lifetime extension in circular economy: The impact on metals, greenhouse gas, and sales of air conditioners

This study examined the effects of product price increases on metal consumption, greenhouse gas (GHG) emissions, and product sales via changes in the product replacement decisions of consumers. A dynamic discrete choice model was applied to air conditioners (ACs) in Japan to determine these effects when product price is increased by from 5% to 30% in 5% increments. To illustrate, a 5% increase in air conditioners was shown to reduce consumption of iron, copper, and aluminum by six, one, and two thousand tons, respectively, while increasing GHG emissions by 506 kt-CO₂ eq. and decreasing product sales by 56 billion Japanese yen. Thus, product price increases for ACs led to a reduction in material consumption while decreasing product sales. The effect on GHG emissions depends on the level of the product price increase. These interactions suggest that consumers will use products longer so long as the value of the product's enhanced durability and longevity matches the increased price of the product. Efforts to improve product durability and longevity, however, will require that AC companies explore new business models in order to cope with the anticipated decrease in product sales as the transition to a circular economy continues.