MARKET SHARE CALCULATIONS FOR EARLY REPLACEMENT Decision Parameters Early Replmnt Market Share 

Year Product Price Operating Savings Income Price/Income Interest CAC/HP None Total 

Parameters for Market Share Calculations for Replacement Units 1951 $10,425.34 -$233.04 $23,911 44.90% 3.25 0.00 1.00 1.00 

1952 $9,932.80 -$229.89 $25,213 40.61% 3.25 0.00 1.00 1.00 

Elec 1953 $9,464.21 -$228.60 $25,808 37.85% 3.25 0.42 0.58 1.00 

Equip. Price in 1998 (98$) $2,236 1954 $9,018.49 -$224.42 $25,320 36.80% 3.25 0.48 0.52 1.00 

1955 $8,594.61 -$225.74 $27,130 32.79% 3.25 0.54 0.46 1.00 

Oper. Cost in 1998 (98$) $197 1956 $8,191.60 -$218.89 $28,573 29.69% 3.75 0.53 0.47 1.00 

1957 $7,808.58 -$208.11 $28,209 28.66% 4.00 0.51 0.49 1.00 

1958 $7,444.67 -$201.01 $27,990 27.55% 3.50 0.54 0.46 1.00 

1959 $7,099.09 -$198.68 $29,652 24.83% 4.50 0.58 0.42 1.00 

1960 $6,771.08 -$192.15 $30,192 23.28% 5.00 0.56 0.44 1.00 

1961 $6,459.95 -$186.68 $31,339 21.41% 4.50 0.57 0.43 1.00 

INITIAL MARKET SHARE 1962 $6,165.04 -$179.69 $31,698 20.20% 4.50 0.58 0.42 1.00 

CAC/HP 1963 $5,885.77 -$173.16 $32,403 18.88% 4.50 0.59 0.41 1.00 

1964 $5,621.59 -$164.99 $33,446 17.47% 4.50 0.59 0.41 1.00 

 Replacement (1996) 0.29 1965 $5,372.00 -$156.55 $34,826 16.02% 4.50 0.59 0.41 1.00 

1966 $5,136.56 -$148.10 $35,993 14.82% 5.50 0.59 0.41 1.00 1967 $4,914.88 -$139.84 $35,878 14.22% 5.50 0.59 0.41 1.00 

COEFFICIENT b Price Coefficient 1968 $4,663.15 -$131.45 $37,861 12.78% 6.50 0.59 0.41 1.00 

CAC/HP 1969 $4,525.68 -$122.28 $39,494 11.87% 7.50 0.57 0.43 1.00 

0 1970 $4,413.86 -$113.73 $39,430 11.58% 8.00 0.56 0.44 1.00 

1971 $4,359.34 -$112.59 $39,473 11.42% 5.50 0.54 0.46 1.00 

COEFFICIENT c Savings Coefficient 1972 $4,278.06 -$111.39 $41,414 10.69% 5.00 0.54 0.46 1.00 

CAC/HP 1973 $4,092.59 -$105.18 $42,125 10.05% 7.25 0.53 0.47 1.00 

0 1974 $3,963.71 -$107.90 $40,401 10.17% 11.50 0.55 0.45 1.00 

1975 $4,142.55 -$105.21 $39,985 10.71% 7.25 0.57 0.43 1.00 

1976 $4,174.66 -$100.83 $40,891 10.54% 7.00 0.55 0.45 1.00 

1977 $4,052.05 -$95.20 $41,658 10.03% 6.75 0.52 0.48 1.00 1978 $3,948.25 -$94.64 $42,951 9.49% 8.50 0.49 0.51 1.00 1979 $3,828.78 -$86.43 $44,134 8.94% 11.75 0.46 0.54 1.00 

1980 $3,657.03 -$84.20 $42,728 8.82% 14.00 0.43 0.57 1.00 

1981 $3,530.05 -$82.69 $42,146 8.64% 20.50 0.39 0.61 1.00 

1982 $3,448.56 -$80.93 $41,146 8.64% 16.50 0.35 0.65 1.00 

1983 $3,502.97 -$77.03 $41,532 8.68% 10.50 0.32 0.68 1.00 

COEFFICIENT f Income Coefficient 1984 $3,391.03 -$74.14 $42,965 8.12% 12.50 0.31 0.69 1.00 

CAC/HP 1985 $3,316.10 -$70.86 $43,887 7.77% 10.00 0.31 0.69 1.00 

0 1986 $3,277.83 -$67.10 $45,459 7.41% 8.50 0.32 0.68 1.00 

1987 $3,139.32 -$60.41 $46,208 6.97% 8.25 0.33 0.67 1.00 

COEFFICIENT g Price/Income Coefficient 1988 $3,116.02 -$55.04 $47,017 6.78% 9.00 0.33 0.67 1.00 

CAC/HP 1989 $3,065.53 -$50.46 $47,909 6.54% 11.50 0.32 0.68 1.00 

-34 1990 $3,019.68 -$46.16 $46,579 6.62% 10.00 0.32 0.68 1.00 

1991 $2,895.84 -$42.24 $45,393 6.50% 8.50 0.32 0.68 1.00 

COEFFICIENT h Interest Coefficient 1992 $2,827.47 $0.00 $45,128 6.27% 6.50 0.32 0.68 1.00 

CAC/HP 1993 $2,730.73 $0.00 $46,262 5.90% 6.00 0.32 0.68 1.00 

0 1994 $2,684.07 $0.00 $47,163 5.69% 7.25 0.31 0.69 1.00 

1995 $2,665.77 $0.00 $47,755 5.58% 9.00 0.30 0.70 1.00 

COEFFICIENT a CONSTANT/INTERCEPT TERM - New Units 1996 $2,661.66 $0.00 $48,831 5.45% 8.25 0.30 0.70 1.00 

CAC/HP 1997 $2,625.85 $0.00 $50,567 5.19% 8.50 0.31 0.69 1.00 

0.87 1998 $2,650.33 $0.00 $51,688 5.13% 8.50 0.32 0.68 1.00 

1999 $2,650.33 $0.00 $52,079 5.09% 7.75 0.33 0.67 1.00 

2000 $2,650.33 $0.00 $52,309 5.07% 8.03 0.34 0.66 1.00 2001 $2,650.33 $0.00 $52,574 5.04% 8.03 0.34 0.66 1.00 2002 $2,650.33 $0.00 $52,579 5.04% 8.03 0.34 0.66 1.00 2003 $2,650.33 $0.00 $53,051 5.00% 8.03 0.35 0.65 1.00 2004 $2,650.33 $0.00 $53,383 4.96% 8.03 0.35 0.65 1.00 2005 $2,650.33 $0.00 $53,933 4.91% 8.03 0.36 0.64 1.00 2006 $2,650.33 $0.00 $54,299 4.88% 8.03 0.36 0.64 1.00 2007 $2,650.33 $0.00 $54,840 4.83% 8.03 0.36 0.64 1.00 2008 $2,650.33 $0.00 $55,432 4.78% 8.03 0.36 0.64 1.00 2009 $2,650.33 $0.00 $56,050 4.73% 8.03 0.36 0.64 1.00 2010 $2,650.33 $0.00 $57,060 4.64% 8.03 0.36 0.64 1.00 2011 $2,650.33 $0.00 $57,373 4.62% 8.03 0.36 0.64 1.00 2012 $2,650.33 $0.00 $58,094 4.56% 8.03 0.36 0.64 1.00 2013 $2,650.33 $0.00 $58,682 4.52% 8.03 0.36 0.64 1.00 2014 $2,650.33 $0.00 $59,438 4.46% 8.03 0.36 0.64 1.00 2015 $2,650.33 $0.00 $60,170 4.40% 8.03 0.36 0.64 1.00 2016 $2,650.33 $0.00 $61,078 4.34% 8.03 0.36 0.64 1.00 2017 $2,650.33 $0.00 $61,799 4.29% 8.03 0.36 0.64 1.00 2018 $2,650.33 $0.00 $62,860 4.22% 8.03 0.36 0.64 1.00 2019 $2,650.33 $0.00 $63,725 4.16% 8.03 0.36 0.64 1.00 2020 $0.00 $0.00 $64,643 0.00% 8.03 0.69 0.31 1.00 2021 $0.00 $0.00 $65,455 0.00% 8.03 0.37 0.63 1.00 2022 $0.00 $0.00 $66,277 0.00% 8.03 0.38 0.62 1.00 2023 $2,650.33 $0.00 $67,109 3.95% 8.03 0.39 0.61 1.00 2024 $2,650.33 $0.00 $67,952 3.90% 8.03 0.39 0.61 1.00 2025 $2,650.33 $0.00 $68,805 3.85% 8.03 0.40 0.60 1.00 2026 $2,650.33 $0.00 $69,669 3.80% 8.03 0.40 0.60 1.00 2027 $2,650.33 $0.00 $70,544 3.76% 8.03 0.41 0.59 1.00 2028 $2,650.33 $0.00 $71,430 3.71% 8.03 0.41 0.59 1.00 2029 $2,650.33 $0.00 $72,327 3.66% 8.03 0.00 1.00 1.002030 $2,650.33 $0.00 $73,235 3.62% 8.03 0.00 1.00 1.00
Relative Probability of Early Replacement

24 25 26 27 28 29 30

0.00 0.00 0.00 0.00 0.00 0.00 0.00 Probability Functions

0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 CAC/HP Age 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 Update Probability (Relative Probability of a Discretionary Update of a CAC/HP)

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03 0.03 0.03 00.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Constants0.00 0.00 0.00 0.00 0.00 0.00 0.00 Annual update constant: 0.05

0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Below, we calculate the evolution of these probability functions over time 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 We use a standard logit model with the operating cost, price, and income coefficients 0.00 0.00 0.00 0.00 0.00 0.00 0.00 calculated in cells g22, g29, and g36. Below we calculate the constant in the logit equation for each CAC/HP age category0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Constants -4.67 -3.97 -3.57 -3.28 -3.05 -2.87 -2.71 -2.58 -2.46 -2.35 -2.25 -2.17 -2.08 -2.01 -1.94 -1.87 -1.81 -1.75 -1.69 -1.6

0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 Note: We use a relative probability that is a linear function of the CAC/HP age for 

0.00 0.00 0.00 0.00 0.00 0.01 0.01 the likelihood of a discretionary purchase (older AC products are more likely to be replaced) .0.00 0.00 0.00 0.01 0.01 0.01 0.010.00 0.00 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.010.01 0.01 0.01 0.01 0.01 0.01 0.020.01 0.01 0.01 0.01 0.01 0.01 0.020.01 0.01 0.01 0.01 0.01 0.01 0.020.01 0.02 0.02 0.02 0.02 0.02 0.020.02 0.02 0.02 0.02 0.02 0.02 0.020.02 0.02 0.02 0.02 0.02 0.02 0.020.02 0.02 0.02 0.02 0.03 0.03 0.030.02 0.02 0.02 0.03 0.03 0.03 0.030.02 0.03 0.03 0.03 0.03 0.03 0.030.02 0.03 0.03 0.03 0.03 0.03 0.030.03 0.03 0.03 0.03 0.03 0.03 0.030.03 0.03 0.03 0.03 0.03 0.03 0.030.03 0.03 0.03 0.03 0.04 0.04 0.040.03 0.03 0.04 0.04 0.04 0.04 0.040.03 0.04 0.04 0.04 0.04 0.04 0.040.04 0.04 0.04 0.04 0.04 0.04 0.040.04 0.04 0.04 0.04 0.04 0.05 0.050.04 0.04 0.04 0.04 0.05 0.05 0.050.04 0.04 0.04 0.04 0.05 0.05 0.050.04 0.04 0.04 0.05 0.05 0.05 0.050.04 0.04 0.04 0.05 0.05 0.05 0.050.04 0.04 0.04 0.05 0.05 0.05 0.050.04 0.04 0.04 0.05 0.05 0.05 0.050.04 0.04 0.04 0.05 0.05 0.05 0.050.04 0.04 0.05 0.05 0.05 0.05 0.050.04 0.04 0.05 0.05 0.05 0.05 0.050.04 0.05 0.05 0.05 0.05 0.05 0.050.04 0.05 0.05 0.05 0.05 0.05 0.050.04 0.05 0.05 0.05 0.05 0.05 0.060.05 0.05 0.05 0.05 0.05 0.06 0.060.05 0.05 0.05 0.05 0.05 0.06 0.060.05 0.05 0.05 0.05 0.06 0.06 0.060.05 0.05 0.05 0.05 0.06 0.06 0.060.05 0.05 0.05 0.05 0.06 0.06 0.060.05 0.05 0.05 0.06 0.06 0.06 0.060.05 0.05 0.05 0.06 0.06 0.06 0.060.05 0.05 0.06 0.06 0.06 0.06 0.060.05 0.06 0.06 0.06 0.06 0.06 0.070.05 0.06 0.06 0.06 0.06 0.06 0.070.19 0.20 0.20 0.21 0.22 0.22 0.230.06 0.06 0.06 0.06 0.07 0.07 0.070.06 0.06 0.06 0.07 0.07 0.07 0.070.06 0.06 0.06 0.07 0.07 0.07 0.070.06 0.06 0.07 0.07 0.07 0.07 0.080.06 0.06 0.07 0.07 0.07 0.07 0.080.06 0.06 0.07 0.07 0.07 0.07 0.080.06 0.07 0.07 0.07 0.07 0.08 0.080.06 0.07 0.07 0.07 0.07 0.08 0.08