What are called goods, whose maintenance expenses are higher than initial price tag. There is a specific term for that, but I can't find it.
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$\begingroup$ Example for this could be car, which usually requires higher maintenance expanses over time than its first price tag. $\endgroup$– JohnApr 28, 2018 at 15:29
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$\begingroup$ Are you thinking of ‘high maintenance’? $\endgroup$– JoaoBotelhoApr 28, 2018 at 17:19
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$\begingroup$ @John Guess that goes for cheap used cars only ;-) $\endgroup$– ssnApr 28, 2018 at 17:41
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$\begingroup$ The term could only refer to the pricing scheme, not the good. Clearly it would be possible to buy an eternal warranty with the good. Perhaps you are thinking of durable goods, because it seems more likely one does not default on the loan if the good is not yet fully consumed, and there could be no maintenance costs if the good is not durable. $\endgroup$– GiskardApr 28, 2018 at 19:22
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1 Answer
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You might be thinking about Demerit goods. This type of goods have negative externality (cost) that are usually ignored by or unknown to the consumer.
As a result, initial cost of the good is relatively low, when compared to the long term cost for the consumer.
Simple example of a demerit goods are cigarettes, since they have to fulfil two criteria:
- be harmful, unhealthy to the individual consumer: smoking is accepted as an unhealthy habit.
- have negative externalities, cost to third parties: secondhand smoke.
Finally, it is important to notice that classification of demerit goods is normative contrary to usual positive economic approach when we classify goods based on their price or income elasticity e.g. ordinal, inferior, luxury.
