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

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  • Frota Neto, João Quariguasi
  • Bloemhof, Jacqueline
  • Corbett, Charles

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.

Suggested Citation

  • Frota Neto, João Quariguasi & Bloemhof, Jacqueline & Corbett, Charles, 2016. "Market prices of remanufactured, used and new items: Evidence from eBay," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 371-380.
  • Handle: RePEc:eee:proeco:v:171:y:2016:i:p3:p:371-380
    DOI: 10.1016/j.ijpe.2015.02.006
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