Possible point of confusion: equilibrium does not imply static equilibrium.
If a firm can’t find someone to maintain their COBOL accounting software, and decides to scrap the old mainframe and have someone write a new piece of software with similar functionality but on modern infra, then that’s functionally the same as replacement due to depreciation.
If that sort of thing happens regularly, then we have a dynamic equilibrium. As an analogy, consider the human body: all of our red blood cells are replaced every couple of months, yet the total number of red blood cells is in equilibrium. Replacement balances removal. Most cell types in the human body are regularly replaced this way, at varying timescales.
That’s the sort of equilibrium we’re talking about here. It’s not that the same software sticks around needing maintenance forever; it’s that software is constantly repaired or replaced, but mostly provides the same functionality.
Possible point of confusion: equilibrium does not imply static equilibrium.
If a firm can’t find someone to maintain their COBOL accounting software, and decides to scrap the old mainframe and have someone write a new piece of software with similar functionality but on modern infra, then that’s functionally the same as replacement due to depreciation.
If that sort of thing happens regularly, then we have a dynamic equilibrium. As an analogy, consider the human body: all of our red blood cells are replaced every couple of months, yet the total number of red blood cells is in equilibrium. Replacement balances removal. Most cell types in the human body are regularly replaced this way, at varying timescales.
That’s the sort of equilibrium we’re talking about here. It’s not that the same software sticks around needing maintenance forever; it’s that software is constantly repaired or replaced, but mostly provides the same functionality.