Value dynamics in the secondary market: How pricing and product lines in the primary market affect value retention

Abstract

The secondary market, the market for used goods, is growing rapidly. Yet, research to date does not provide firm insights into how much value different products retain in this secondary market. Although most products lose value when transitioning from the primary to the secondary market, this research shows that not all products within a line lose value at the same rate. Sales data from the North American used automobile market and from used iPads on eBay are modeled to examine how product level factors, such as a product's features, and product line level factors, such as the breadth and boundaries of a product line and a product's position relative to others in its product line, affect value retention. The findings provide guidance for firms to optimize profits and pave the way for further research on the dynamics of value retention in the marketplace.