Are Consumers Forward-Looking? Evidence from Used iPhones
8 Pages Posted: 15 Jul 2017
Date Written: June 18, 2017
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.
Keywords: durable goods, mobile phones, product obsolescence, forward-looking consumer
JEL Classification: D12, L19, L63
Suggested Citation: Suggested Citation