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Are Consumers Forward-looking? Evidence from Used iPhones

Author

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  • Voraprapa Nakavachara
  • Kanis Saengchote

Abstract

This study examines the impact of planned obsolescence – the introduction of new models to make existing models obsolete – on secondary markets for mobile phones. Using data of over 320,000 used iPhones listings on Thailand's largest online marketplace, we document that iPhone prices decrease with age, around 2.8 to 3.2 percent for each passing month. We find no evidence that the price decline accelerates after launches of new models (i.e. obsolescence), lending support to the view that consumer in durable goods markets are rational and forward-looking.

Suggested Citation

  • Voraprapa Nakavachara & Kanis Saengchote, 2017. "Are Consumers Forward-looking? Evidence from Used iPhones," PIER Discussion Papers 66, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:66
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    File URL: https://www.pier.or.th/files/dp/pier_dp_066.pdf
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    References listed on IDEAS

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    1. Daniel A. Levinthal & Devavrat Purohit, 1989. "Durable Goods and Product Obsolescence," Marketing Science, INFORMS, vol. 8(1), pages 35-56.
    2. Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014. "A Quantitative Analysis of the Used-Car Market," American Economic Review, American Economic Association, vol. 104(11), pages 3668-3700, November.
    3. Judith Chevalier & Austan Goolsbee, 2009. "Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1853-1884.
    4. Eric W. Bond & Toshiaki Iizuka, 2014. "Durable Goods Price Cycles: Theory And Evidence From The Textbook Market," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 518-538, April.
    5. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2013. "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, American Economic Association, vol. 103(1), pages 220-256, February.
    6. Toshiaki Iizuka, 2007. "An Empirical Analysis of Planned Obsolescence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 191-226, March.
    7. Devavrat Purohit, 1992. "Exploring the Relationship Between the Markets for New and Used Durable Goods: The Case of Automobiles," Marketing Science, INFORMS, vol. 11(2), pages 154-167.
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    Cited by:

    1. Guo, Audrey & Zhang, Jonathan, 2019. "What to expect when you are expecting: Are health care consumers forward-looking?," Journal of Health Economics, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Durable Goods; Mobile Phones; Product Obsolescence; Forward-looking Consumer;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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