Prediction Ecommerce Market Changes

By Johnny C.H. Lok

A market for second hand textbooks raises the price of textbooks because some people are not able and willing to buy new textbooks but are willing to buy second hand textbooks. In the absence of such a market, they'll spend their income on other goods that they deem more important. Think of it otherwise this way. In the absence of a market for used textbooks the full value of a textbook is not exploited because some people who would wish to trade with one another cannot trade with one another. If there wasn't a used good market( ρ=1), the editor would have to satisfy a constant demand, and you solve it just for one period (which will stay the same afterwards). The price for new books will be below the one you calculated above. On the consumer (student) side, they would have greater resistance to buy books that cannot be resold. There would be pressure placed on the professor to find cheaper alternatives. In other words, there should also be an effect on total demand, on top of the competition with old books. - Brian Romanchuk Apr 25 '17 at 21:20In used car and second hand book similar consumer behavioral characteristics view, a buyer wants a way to make revenue back on the initial investment of a car, if this isn't possible ( a used car market doesn't exist) then the car buyer may find another investment opportunity and avoid cars altogether. However, without a used car market, demand for new cars would increase, presuming cars are a necessity, and so therefore would the price. The price of new cars could possibly reduce if there is a used car market as the dealers will want new stock leaving so that they don't stop trading.From what I can understand, in the context of the used books market, lets assume that there is set, finite amount of demand for the books. When there is a used books market, the demand first goes to the used books market and finishes up the supply in that market. The remaining demand then goes to the new books market (the professor/publisher). To compensate for the loss in demand, the publisher would therefore have to raise prices of the new books.Now for the cars market, when there is no used cars market, everyone is indeed forced to buy new cars which raises demand and consequently price. However, you are assuming that cars are a necessity and that the demand transfers 100% from used cars to new cars. Some people maybe only purchasing cars from used cars market because they see the value in the lower price. When there is no longer a used car market, if the price of the new car remains the same, then people would deem that price to be too expensive since they are unable to resell it later on and ultimately choose not to buy at all or opt for alternatives. This actually reduces demand. To capture the market of such consumers, the car companies would ultimately reduce prices to get the market share. This is from the Bertrand competition model point of view.

• Format: Paperback
• Language: English
• ISBN: B08D4QXFQF
• ISBN13: 9798665159843
• Release Date: January 1
• Publisher: Independently Published
• Length: 256 Pages
• Weight: 1.56 lbs.
• Dimensions: 0.7" x 8.0" x 10.0"