Comment by Paul_Clayton

I think reputation and warranties are insufficient. While building a reputation may be expensive, destroying a reputation can be profitable (in the short term). Warranties can also be made less effective by making the buyer spend excessive time and effort to enforce the warranty. The company sets the terms and effectively their interpretation, so after two years of waiting, nudging, waiting, complaining, waiting, threatening, and waiting one finally gets an "equivalent value" replacement (and the warranty clock was running during that time).

The company might also go bankrupt with much of its profits having gone to owners and decision makers who are not bound to honor the warranty.