Top-Shelf Price for Bottom-Shelf Goods: Transaction Related Price Factors
Advisor Information
Catherine Co
Location
Milo Bail Student Center Dodge Room B
Presentation Type
Oral Presentation
Start Date
8-3-2013 1:30 PM
End Date
8-3-2013 1:45 PM
Abstract
This article specifies and estimates the influence of purchase related transaction costs on the spread in price between new and used durable goods. Its primary contributions are to provide a framework for studying consumer choice in the presence of both new and used markets for durables, and decomposing transaction costs into separate measurable elements. The model also considers the element of newness in the purchase decision. Specifically, I estimate the contribution on price spread of six transaction elements, and a measure of newness, in the market for used store fixtures. Results show that vendors who provide services to reduce transaction costs can command a premium in the marketplace and narrow the spread in price between new and used. The results also show that refurbishing a product, bringing back that new car smell, can increase relative price.
Top-Shelf Price for Bottom-Shelf Goods: Transaction Related Price Factors
Milo Bail Student Center Dodge Room B
This article specifies and estimates the influence of purchase related transaction costs on the spread in price between new and used durable goods. Its primary contributions are to provide a framework for studying consumer choice in the presence of both new and used markets for durables, and decomposing transaction costs into separate measurable elements. The model also considers the element of newness in the purchase decision. Specifically, I estimate the contribution on price spread of six transaction elements, and a measure of newness, in the market for used store fixtures. Results show that vendors who provide services to reduce transaction costs can command a premium in the marketplace and narrow the spread in price between new and used. The results also show that refurbishing a product, bringing back that new car smell, can increase relative price.