I study the impact of the used goods market on pricing and profits in the video game industry and the implications of resale restrictions. I develop a modeling framework that incorporates (a) heterogeneous consumers who are forward looking in their buying an selling behaviors, (b) a strategic game producer who prices its products considering both inter-temporal price discrimination and price competition with used goods, (c) rational expectations on future prices by both consumers and the firm, and (d) market equilibria for both new and used-goods markets. Without observing sales data, I use equilibrium pricing solutions in my model and the varying rate of price decrease after a game's release to identify the sales volume of a game in every period as a percentage of its total demand. I develop a computationally tractable utility specification to solve the computational challenge comes with modeling the supply side equilibrium. I construct the demand function for a game from heterogeneous consumers whose valuations distribute on an interval, and partially characterize the consumers' decisions and reduce the dimensionality of the state space. Applying the model to a unique dataset of game prices collected from the Internet, I estimate the game-specific demand for multiple games released in the U.S. market. The results show significant variation across games in terms of shapes of valuation distributions, expected play time, degrees of consumers' preference for new over used games, and price sensitivities. Policy simulations show that the effects of prohibiting resale largely depend on the shape of a game's demand distribution, because most of the profits are gained from higher-valuation consumers who purchase the game when the price is high. Prohibiting resale does not dampen their willingness to pay for the game because their high utility from playing it. Moreover, higher expected future prices in the absence of the used-game market further reduces their incentives to wait. I find the predicted profit increase is significant for most games when reselling is prohibited. However, games with demand consisting mostly of low valuation consumers benefit less from this structural change, because (a) early sales increase only slightly given a much smaller proportion of high valuation consumers and (b) losing the option to resell significantly decreases the willingness to pay for low valuation consumers, forcing the firm to slash its prices dramatically over time. I find empirical evidence that a firm can be better off with the used game market. This suggests that though eliminating the resale market is generally optimal for popular games, retaining it can be more profitable for some games. / text

Buying and selling of used goods is something that has been done for centuries. Throughout the last 20 years, rapid growth of second-hand products consumption has got the attention of researchers and raised the question why customers buy second-hand products. The growth of the Internet has developed different applications, and this combined with the introduction of new electronic devices, provides users with buying and selling facilities of goods over the Internet and mobile devices. The uses of social networks and smart-phones have also revolutionized the second-hand product market among all economic classes. The consumption of second-hand products is increasing daily. Therefore it is important to pay attention to the factors that affect the purchase of second-hand products since it is not a simple form of mercantilism. It's a lifestyle, a way to acquire goods that we need and get rid of those that we do not see as useful anymore. The purpose of this study is to create new knowledge in the area of second-hand products consumption and customer buying behavior by identifying factors that influence the customer in buying second-hand products. In order to fulfill the research purpose, a quantitative research approach and cross sectional research design were adopted. Questionnaires were designed using Google survey tool and through this method 169 questionnaires were collected from respondents. After which, SPSS was used to perform the required tests of descriptive statistics, reliability analysis, bivariate correlation, single item measurement and multiple regression analysis. It was observed that price was the most important factor influencing customers when purchasing second-hand products; risk is the second most influencing factor and brand is the third and location come last as most influencing factor.  The results show that the factors such as brand, price and purchase intention of second-hand products have no association and influence on each other during the purchase decision. In contrast, risk and location factors have a weak association with each other but both factors lack association with brand, price and intention. This study contributes to the existing literature on second-hand products consumption and customer buying behavior as well as touching upon theories of brand, price, risk, and seller location.

<div><div><div><p>The purpose of this project was to investigate and propose a solution to gaps identified in existing paradigms for buying and selling secondhand goods online. Through a review of existing literature, the secondhand market was explored together with the variety of reasons for individuals’ participation. Different modes of collaborative consumption and some of the challenges unique to peer-to-peer markets were also examined. A computational approach to identifying items and actions within digital media was reviewed in support of the proposed solution. Research discoveries uncovered through directional surveys, semi-structured interviews, and an analysis of peer products were summarized. These discoveries were consolidated into a list of requirements, including 1) being able to sell many items at once, 2) disbursing items quickly and with minimal effort, 3) making lower value items worth selling, 4) establishing and maintaining trust by designing for safety and encouraging quality, and 5) reducing the need for communication between buyers and sellers by managing the sale, condition, and inventory status. After multiple rounds of concept development, a principal direction based upon the “make me move” concept in the real estate industry was selected. Combined with panoramic images, the resulting solution relied on computer-driven tagging of items for sale. This allowed many items to be listed at once through a single image while making it possible for buyers to find and place offers. Offers were suggested in lieu of bids or an immediate checkout process to avoid some of the negative, bid-related behaviors and minimize the communication required to complete a sale. An interactive prototype was created to evaluate the concept and usability via online user testing, which included surveys and cognitive walkthroughs. The results were analyzed and prioritized to refine the final details of the solution. Overall, I demonstrated a unique concept for buying and selling secondhand goods which supports selling many items, efficiently and safely, while eliminating much of the back and forth communication required to facilitate transactions on many existing platforms.</p></div></div></div>

This thesis studies the interaction between new and used durable goods without physical depreciation. In product categories such as CDs/DVDs and video games, the competition from used goods markets has been viewed as a serious problem by producers. These products physically depreciate negligibly, but owners' consumption values could depreciate quickly due to satiation. Consequently, used goods that are almost identical to new goods may become available immediately after a new product release. However, the existence of used goods markets also provides consumers with a selling opportunity. If consumers are forward-looking and account for the future resale value of a product in their buying decision, used goods markets could increase the sales of new goods. Thus, whether used good markets are harmful or beneficial to new-good producers is an empirical question. To tackle this question, I extend the previous literature in three ways. First, I assemble a new data set from the Japanese video game market. This unique data set includes not only the sales and prices of new and used goods, but also the resale value of used copies, the quantity of used copies retailers purchased from consumers, and the inventory level of used copies at retailers. Second, I develop a structural model of forward-looking consumers that incorporates (i) new and used goods buying decisions, (ii) used goods selling decisions, (iii) consumer expectations about future prices of new and used goods as well as resale values of used goods, and (iv) the depreciation of both owners' and potential buyers' consumption values. Third, I develop a new Bayesian estimation method to estimate my model. In particular, my method can alleviate the computational burden of estimating non-stationary discrete choice dynamic programming models with continuous state variables that evolve stochastically over time. The estimation results suggest that consumers are forward-looking in the Japanese video game market and the substitutability between new and used video games is quite low. Using the estimates, I quantify the impact of eliminating the used video game market on new-game revenues. I find that the elimination of used video game market could reduce the revenue for a new game.

This thesis studies the interaction between new and used durable goods without physical depreciation. In product categories such as CDs/DVDs and video games, the competition from used goods markets has been viewed as a serious problem by producers. These products physically depreciate negligibly, but owners' consumption values could depreciate quickly due to satiation. Consequently, used goods that are almost identical to new goods may become available immediately after a new product release. However, the existence of used goods markets also provides consumers with a selling opportunity. If consumers are forward-looking and account for the future resale value of a product in their buying decision, used goods markets could increase the sales of new goods. Thus, whether used good markets are harmful or beneficial to new-good producers is an empirical question. To tackle this question, I extend the previous literature in three ways. First, I assemble a new data set from the Japanese video game market. This unique data set includes not only the sales and prices of new and used goods, but also the resale value of used copies, the quantity of used copies retailers purchased from consumers, and the inventory level of used copies at retailers. Second, I develop a structural model of forward-looking consumers that incorporates (i) new and used goods buying decisions, (ii) used goods selling decisions, (iii) consumer expectations about future prices of new and used goods as well as resale values of used goods, and (iv) the depreciation of both owners' and potential buyers' consumption values. Third, I develop a new Bayesian estimation method to estimate my model. In particular, my method can alleviate the computational burden of estimating non-stationary discrete choice dynamic programming models with continuous state variables that evolve stochastically over time. The estimation results suggest that consumers are forward-looking in the Japanese video game market and the substitutability between new and used video games is quite low. Using the estimates, I quantify the impact of eliminating the used video game market on new-game revenues. I find that the elimination of used video game market could reduce the revenue for a new game.

Bazaar and pawnshop: etnography at the interface of formal and informal economy Abstract: In this paper I deal with the issue, regarding what actually constitutes bazaar-pawnshop and what this facility means for different groups of customers. Basic research method is auto- ethnography, because best suits in the situation, where I am myself the owner of such shop and during field research I use my own memories and perform both as a direct participant-owner as well as an anthropologist, examining the environment of bazaar. In the empirical part, I offer a brief characterization of different types of customers, depending on the way how they use the bazaar-pawnshop. By describing and analyzing relationships and interactions occurring in the course of business negotiations in the bazaar-pawnshop, I try to show what this type of economy, often referred to as informal or marginal, means for different groups of customers. In particular, I focus on the question how marginalized groups perceive bazaar-pawnshop and how they incorporate it into their lifestyle. On the basis of collected data I infer that they regard the bazaar- pawnshop as a standard economic facility and as an almost necessary part of their everyday life. Keywords: bazaar-pawnshop, purchase, sale, pawn, loan, used goods, customers, marginalized groups