Knowledge that Transforms

SUMMARY IN TWO RECENT articles Messrs. Stone and Rowe have proposed an interesting dynamic model of demand.' They have applied this model to a variety of commodities, both durable and perishable. It is not the purpose of this note to criticize the underlying conceptual framework of the Stone-Rowe approach, but merely to point out that in the actual application of their model to durable goods, Stone and Rowe make assumptions which are unduly restrictive. Much of the difficulty lies with the assumption of relations linear in logarithms. When semilogarithmic or strictly linear relations are allowed, it becomes possible to estimate the appropriate depreciation rate rather than to assume its value as is done by Stone and Rowe.