|
Archive@NYU >
Stern School of Business >
CeDER Published Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27751
|
| Title: | Effect of Electronic Secondary Markets on the Supply Chain |
| Authors: | Ghose, Anindya
Telang, Rahul
Krishnan, Ramayya |
| Keywords: | electronic markets
information goods
market segmentation
quality degradation
supply chain
used goods |
| Issue Date: | 6-Nov-2008 |
| Series/Report no.: | CeDER-PP-2005-01 |
| Abstract: | We present a model to investigate the competitive implications of
electronic secondary markets that promote concurrent selling of new and
used goods on a supply chain. In secondary markets where suppliers
cannot directly utilize used goods for practicing intertemporal price
discrimination and where transaction costs of resales is negligible, the
threat of cannibalization of new goods by used goods become significant.
We examine conditions under which it is optimal for suppliers to operate
in such markets, explaining why these markets may not always be
detrimental for them. Intuitively, secondary markets provide an active
outlet for some highvaluation consumers to sell their used goods. The
potential for such resales lead to an 05 ghose.pmd 91 8/26/2005, 1:10 PM
92 GHOSE, TELANG, AND KRISHNAN increase in consumersâ valuation
for a new good, leading them to buy an additional new good. Given
sufficient heterogeneity in consumerâ s affinity across multiple
suppliersâ products, the â market expansion effectâ
accruing from consumersâ cross-product purchase affinity can
mitigate the losses incurred by suppliers from the direct â
cannibalization effect.â We also highlight the strategic role
that used goods commission set by the retailer plays in determining
profits for suppliers. We conclude the paper by empirically testing some
implications of our model using a unique data set from the online book
industry, which has a flourishing secondary market. |
| URI: | http://hdl.handle.net/2451/27751 |
| Appears in Collections: | CeDER Published Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
