While the durable goods literature in industrial organization has considered the choice of durability by the producer an important decision to explain market outcomes, the neoclassical and vintage models of the macroeconomics literature often overlook the choice of the durability of capital. In this paper, I use an endogenous growth framework that characterizes capital-generating firms as durable goods producers to analyze the existing empirical evidence in terms of GDP per capita growth rates, the decline in the relative price of capital, and the capital depreciation rates. In this setting, I show that, under mild conditions, breaking economies (economies with capital that depreciates faster) have more incentives to invest in productivity-enhancing technologies. In turn, I show that these increased incentives accelerate the decline in capital prices and foster GDP per capita growth even when capital follows a constant depreciation rate pattern.
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