We compare the rates of product innovation under rental versus sales when the product is durable and the market structure is one of duopoly. Our main conclusion is that sales induce a slower and more efficient rate of product introductions than rentals. The basic reason for this is that under rentals sellers are able to extract a higher surplus from buyers, and this higher surplus is dissipated away through excessive rate of product innovation. Since the exact opposite is true under monopoly market structure this highlights the role of market structure in determining the rate of product innovations when the product is durable.