durable-goods-leasing-in-the-presence-of-exporting-used-products-to-an-international
feb 25
 
DATE:
2016
February 25.
12:00 - 13:30
THIS EVENT IS OPEN TO THE PUBLIC
 
LOCATION:
CEU, Gellner Room
Budapest 1051
Nádor u. 9.
 
 
Social Event
 
 
DURABLE GOODS LEASING IN THE PRESENCE OF EXPORTING USED PRODUCTS
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by Paul Lacourbe, Associate Professor

DURABLE GOODS LEASING IN THE PRESENCE OF EXPORTING
USED PRODUCTS TO AN INTERNATIONAL SECONDARY MARKET

Abstract:

With the rapid growth of global trade, used durable goods from wealthy countries increasingly find their way into the secondary market of less wealthy countries. Exporting used products to a physically separate market not only removes cannibalization for new products at home, but also fetches additional revenue. In this paper, we investigate the implications of exporting used products to international secondary markets in the durable goods industry. We find that such a practice may significantly stimulate new product lease on the home market, an effect in which the market attractiveness and product quality are mutually reinforcing. We discover that removing cannibalization pressure is more of a priority than generating additional revenue while exporting used products.

If the export is carried out by an agent, who exports used products bought from OEM (Original Equipment Manufacturer), we observe the disadvantage of double marginalization in a channel structure, which slows down export and causes quantity distortion, and also reduces the effectiveness of government stimulus. However, if the agent and OEM set export price based supply and demand equilibrium, this reduces the quantity distortion. One special characteristic of used products trade across borders is the involvement of governments on both sides of the border. The government measures include penalties imposed on aging durable goods and trade barriers. We find that legislation of penalizing used products on the domestic market can stimulate export, but it does not have an intended effect of stimulating new products produced at home. The channel structure worsens the problem.



 
  • "I have been recently nominated as the Regional IT Manager for West Africa at Unilever. My CEU Business School education has been a key differentiator during an otherwise very competitive recruitment process. I would like to thank all my great peers of the 2013-14 cohort and the wonderful faculty at the B-School for the valuable learning experience I had during my time in BP."

    Moussa Moumouni

    MSc in IT Management class of 2014

     
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