Market prices of remanufactured, used and new items: Evidence from eBay

J. Quariguasi Frota Neto, J.M. Bloemhof, C.J. Corbett

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49 Citations (Scopus)

Abstract

Extending the life-cycle of products has received ample attention in the field of reverse logistics, but research on the market acceptance of remanufactured products is still in its infancy, especially how they compare to used products. In this paper, we investigate how consumers perceive remanufactured products relative to used and new products. We construct a database containing 1716 eBay listings, and use that to investigate the factors that influence the differences in prices between used, remanufactured, and new iPods. Our results confirm that remanufactured products are sold at a discount relative to new products. New to the literature on reverse logistics are the following results. For all types of iPods we find evidence that remanufactured products command a premium over their used counterparts. Also, for two types of iPod, a positive description of the product increases the average price for used products relative to remanufactured ones, which suggests that consumers need less reassurance regarding the quality of remanufactured products than used ones. Furthermore, for the third type of iPod, and for all new and remanufactured products, we find no evidence that a positive description significantly affects price. We explain our findings through the lenses of information asymmetry and adverse selection. We also observed that price dispersion is higher for used than for remanufactured products, indicating that remanufacturing may homogenise the quality of products, or at least the way consumers perceive them. We conclude that consumer perception of remanufactured products relative to their used and new counterparts, and hence their willingness to pay, depends in subtle and not yet well-understood ways on the nature of the product. 4. Analysis 5. Results and discussion 6. Conclusions, limitations and further research References Figures and tables Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 ADVERTISEMENT International Journal of Production Economics Available online 18 February 2015 In Press, Corrected Proof — Note to users Cover image Market prices of remanufactured, used and new items: Evidence from eBay João Quariguasi Frota Netoa, , , Jacqueline Bloemhofb, 1, , Charles Corbettc, 2, a University of Bath, School of Management, Wessex House, Room 9.10, Bath, United Kingdom b Wegeningen University, Logistics, Decision and Information Sciences, Leeuwenborch, 6th Floor, Room 6015, Wageningen, The Netherlands c University of California at Los Angeles (UCLA), Anderson School of Management, Gold Hall, Suite B-507, 110 Westwood Plaza Los, Angeles, CA, USA Received 16 October 2013, Accepted 9 February 2015, Available online 18 February 2015 Show less doi:10.1016/j.ijpe.2015.02.006Get rights and content Abstract Extending the life-cycle of products has received ample attention in the field of reverse logistics, but research on the market acceptance of remanufactured products is still in its infancy, especially how they compare to used products. In this paper, we investigate how consumers perceive remanufactured products relative to used and new products. We construct a database containing 1716 eBay listings, and use that to investigate the factors that influence the differences in prices between used, remanufactured, and new iPods. Our results confirm that remanufactured products are sold at a discount relative to new products. New to the literature on reverse logistics are the following results. For all types of iPods we find evidence that remanufactured products command a premium over their used counterparts. Also, for two types of iPod, a positive description of the product increases the average price for used products relative to remanufactured ones, which suggests that consumers need less reassurance regarding the quality of remanufactured products than used ones. Furthermore, for the third type of iPod, and for all new and remanufactured products, we find no evidence that a positive description significantly affects price. We explain our findings through the lenses of information asymmetry and adverse selection. We also observed that price dispersion is higher for used than for remanufactured products, indicating that remanufacturing may homogenise the quality of products, or at least the way consumers perceive them. We conclude that consumer perception of remanufactured products relative to their used and new counterparts, and hence their willingness to pay, depends in subtle and not yet well-understood ways on the nature of the product.
Original languageEnglish
Pages (from-to)371-380
Number of pages10
JournalInternational Journal of Production Economics
Volume171
Issue numberPart 3
DOIs
Publication statusPublished - 2016

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