Skip to main content
SpringerLink
Log in

Secondary Markets

  • Living reference work entry
  • First Online:
The New Palgrave Dictionary of Economics

  • 266 Accesses

Abstract

There is a broad and growing literature on secondary markets, partly inspired by the increased ability of consumers to resell and distribute items over the Internet. In this entry I consider when secondary markets exist and discuss the existing theoretical and empirical literatures both on the performance of secondary markets and on how secondary markets affect welfare and what happens in primary markets.

This chapter was originally published in The New Palgrave Dictionary of Economics Online, 2019. Edited by Palgrave Macmillan

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Bibliography

  • Akerlof, George A. 1970. The market for “lemons”: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics 84 (3): 488–500.

    Article  Google Scholar 

  • Antia, Kersi D., Mark Bergen, and Shantanu Dutta. 2004. Competing with gray markets. MIT Sloan Management Review 46 (1): 63.

    Google Scholar 

  • Bauner, Christoph. 2015. Mechanism choice and the buy-it-now auction: A structural model of competing buyers and sellers. International Journal of Industrial Organization 38: 19–31.

    Article  Google Scholar 

  • Bennett, Victor M., Robert Seamans, and Feng Zhu. 2015. Cannibalization and option value effects of secondary markets: Evidence from the US concert industry. Strategic Management Journal 36 (11): 1599–1614.

    Article  Google Scholar 

  • Bikhchandani, Sushil, and Chi-fu Huang. 1993. The economics of treasury securities markets. Journal of Economic Perspectives 7 (3): 117–134.

    Article  Google Scholar 

  • Brancaccio, Giulia, Dan Li, and Norman Schurhoff. 2017. Learning by trading: The case of the US market for municipal bonds. Working paper, Princeton University.

    Google Scholar 

  • Calzolari, Giacomo, and Alessandro Pavan. 2006. Monopoly with resale. RAND Journal of Economics 37 (2): 362–375.

    Article  Google Scholar 

  • Chen, Jiawei, Susanna Esteban, and Matthew Shum. 2013. When do secondary markets harm firms? American Economic Review 103 (7): 2911–2934.

    Article  Google Scholar 

  • Chevalier, Judith, and Austan Goolsbee. 2009. Are durable goods consumers forward-looking? Evidence from college textbooks. Quarterly Journal of Economics 124 (4): 1853–1884.

    Article  Google Scholar 

  • Clerides, Sofronis. 2008. Gains from trade in used goods: Evidence from automobiles. Journal of International Economics 76 (2): 322–336.

    Article  Google Scholar 

  • Courty, Pascal. 2003a. Ticket pricing under demand uncertainty. Journal of Law and Economics 46 (2): 627–652.

    Article  Google Scholar 

  • Courty, Pascal. 2003b. Some economics of ticket resale. Journal of Economic Perspectives 17 (2): 85–97.

    Article  Google Scholar 

  • Courty, Pascal. 2019. Secondary ticket markets for sports events. In The Sage Handbook of sports economics. SAGE Publishing Ltd. https://uk.sagepub.com/en-gb/eur/the-sage-handbook-of-sportseconomics/book252257

  • Daily, Glenn, Igal Hendel, and Alessandro Lizzeri. 2008. Does the secondary life insurance market threaten dynamic insurance? American Economic Review 98 (2): 151–156.

    Article  Google Scholar 

  • Doherty, Neil A., and Hal J. Singer. 2003. The benefits of a secondary market for life insurance policies. Real Property, Probate and Trust Journal 38: 449–478.

    Google Scholar 

  • Dove, Ronald G., and Hope Hamilton. Combat grey market goods in the US. Managing Intellectual Property, November 2008. Available at https://www.cov.com/files/Publication/6c6c6077-89f7-4155-9d79-6a1754a1a2e1/Presentation/PublicationAttachment/66a867f6-2999-4eae-9ebe-714e35e5df58/Combat%20Grey%20Market%20Goods%20in%20the%20US.pdf

  • Edmunds. 2018. Used car report Q2 2018. Available at https://static.ed.edmunds-media.com/unversioned/img/car-news/data-center/2018/aug/used-car-report-q2.pdf

  • Emons, Winand, and George Sheldon. 2009. The market for used cars: New evidence of the lemons phenomenon. Applied Economics 41 (22): 2867–2885.

    Article  Google Scholar 

  • Engers, Maxim, Monica Hartmann, and Steven Stern. 2009. Are lemons really hot potatoes? International Journal of Industrial Organization 27 (2): 250–263.

    Article  Google Scholar 

  • Federal Trade Commission. 2016. Buying a used car. Available at https://www.consumer.ftc.gov/articles/pdf-0077_buyingausedcar.pdf

  • Garratt, Rod, and Thomas Tröger. 2006. Speculation in standard auctions with resale. Econometrica 74 (3): 753–769.

    Article  Google Scholar 

  • Gartner. Gartner says worldwide market for refurbished smartphones to reach 120 million units by 2017, press release, February 18, 2015. Available at https://www.gartner.com/newsroom/id/2986617

  • Gavazza, Alessandro, Alessandro Lizzeri, and Nikita Roketskiy. 2014. A quantitative analysis of the used-car market. American Economic Review 104 (11): 3668–3700.

    Article  Google Scholar 

  • Genesove, David. 1993. Adverse selection in the wholesale used car market. Journal of Political Economy 101 (4): 644–665.

    Article  Google Scholar 

  • Gilligan, Thomas W. 2004. Lemons and leases in the used business aircraft market. Journal of Political Economy 112 (5): 1157–1180.

    Article  Google Scholar 

  • Haile, Philip A. 2000. Partial pooling at the reserve price in auctions with resale opportunities. Games and Economic Behavior 33 (2): 231–248.

    Article  Google Scholar 

  • Haile, Philip A. 2001. Auctions with resale markets: An application to US forest service timber sales. American Economic Review 91 (3): 399–427.

    Article  Google Scholar 

  • Hendel, Igal, and Alessandro Lizzeri. 1999a. Adverse selection in durable goods markets. American Economic Review 89 (5): 1097–1115.

    Article  Google Scholar 

  • Hendel, Igal, and Alessandro Lizzeri. 1999b. Interfering with secondary markets. RAND Journal of Economics 30: 1–21.

    Article  Google Scholar 

  • Hendel, Igal, and Alessandro Lizzeri. 2002. The role of leasing under adverse selection. Journal of Political Economy 110 (1): 113–143.

    Article  Google Scholar 

  • Kendall, Brent, and Erich Schwartzel. Now showing: US mulls changing movie rules for the big screen. Wall Street Journal, December 2, 2018. Available at: https://www.wsj.com/articles/now-showing-u-s-mulls-changing-movie-rules-for-the-big-screen-1543755602.

  • Larsen, Bradley. 2014. The efficiency of real-world bargaining: Evidence from wholesale used-auto auctions. Working paper No. w20431. National Bureau of Economic Research.

    Google Scholar 

  • Leslie, Phillip, and Alan Sorensen. 2013. Resale and rent-seeking: An application to ticket markets. Review of Economic Studies 81 (1): 266–300.

    Article  Google Scholar 

  • Lichtenberg, Frank R. 2011. Pharmaceutical companies’ variation of drug prices within and among countries can improve long-term social well-being. Health Affairs 30 (8): 1539–1544.

    Article  Google Scholar 

  • Liebowitz, Stan J. 2016. How much of the decline in sound recording sales is due to file-sharing? Journal of Cultural Economics 40 (1): 13–28.

    Article  Google Scholar 

  • Macnab, Geoffrey, Gabriele Niola, Martin Blaney, Elisabet Cabeza, and Melanie Goodfellow. Are much shorter theatrical windows around the corner? Screen Daily, January 2, 2017. https://www.screendaily.com/features/are-much-shorter-theatrical-windows-around-the-corner/5112398.article

  • Mayo, John W., and Scott Wallsten. 2010. Enabling efficient wireless communications: The role of secondary spectrum markets. Information Economics and Policy 22 (1): 61–72.

    Article  Google Scholar 

  • Rust, John. 1986. When is it optimal to kill off the market for used durable goods? Econometrica 54 (1): 65–86.

    Article  Google Scholar 

  • Shapiro, Stephen L., Brendan Dwyer, and Joris Drayer. 2016. Examining the role of price fairness in sport consumer ticket purchase decisions. Sport Marketing Quarterly 25 (4): 227–240.

    Google Scholar 

  • Shulman, Jeffrey D., and Anne T. Coughlan. 2007. Used goods, not used bads: Profitable secondary market sales for a durable goods channel. Quantitative Marketing and Economics 5 (2): 191–210.

    Article  Google Scholar 

  • Sieper, E., and Peter L. Swan. 1973. Monopoly and competition in the market for durable goods. Review of Economic Studies 40 (3): 333–351.

    Article  Google Scholar 

  • Statistical Abstract of the United States 2018. 2017. Proquest statistical abstract of the United States 2018. Lanham: Rowman & Litlefield.

    Google Scholar 

  • Stothers, Christopher. 2012. When is copyright exhausted by a software licence? UsedSoft v Oracle. European Intellectual Property Review 34 (11): 787–791.

    Google Scholar 

  • Swan, Peter L. 1970. Durability of consumption goods. American Economic Review 60 (5): 884–894.

    Google Scholar 

  • Swan, Peter L. 1972. Optimum durability, second-hand markets, and planned obsolescence. Journal of Political Economy 80 (3, Part 1): 575–585.

    Article  Google Scholar 

  • Swan, Peter L. 1980. Alcoa: The influence of recycling on monopoly power. Journal of Political Economy 88 (1): 76–99.

    Article  Google Scholar 

  • Sweeting, Andrew. 2012. Dynamic pricing behavior in perishable goods markets: Evidence from secondary markets for major league baseball tickets. Journal of Political Economy 120 (6): 1133–1172.

    Article  Google Scholar 

  • United States Department of Justice. Wells Fargo agrees to pay $2.09 billion penalty for allegedly misrepresenting quality of loans used in residential mortgage-backed securities. Press release, August 1, 2018. Available at: https://www.justice.gov/opa/pr/wells-fargo-agrees-pay-209-billion-penalty-allegedly-misrepresenting-quality-loans-used

  • Waldfogel, Joel. 2010. Music file sharing and sales displacement in the iTunes era. Information Economics and Policy 22 (4): 306–314.

    Article  Google Scholar 

  • Waldman, Michael. 1996. Durable goods pricing when quality matters. Journal of Business: 489–510.

    Article  Google Scholar 

  • Waldman, Michael. 1997. Eliminating the market for secondhand goods: An alternative explanation for leasing. Journal of Law and Economics 40 (1): 61–92.

    Article  Google Scholar 

  • Young, S. Mark, James Gong, and Wim Van der Sted. The business of making money with movies. Strategic Finance, February 2010. Available at: https://sfmagazine.com/wp-content/uploads/sfarchive/2010/02/The-Business-of-Making-Money-with-Movies.pdf

  • Zentner, Alejandro. 2006. Measuring the effect of file sharing on music purchases. Journal of Law and Economics 49 (1): 63–90.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Maryland, College Park, MD, USA

    Andrew Sweeting

Authors
  1. Andrew Sweeting
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Andrew Sweeting .

Editor information

Editors and Affiliations

    Section Editor information

    1. No affiliation provided

      Robert Picard

    Copyright information

    © 2019 The Author(s), under exclusive license to Springer Nature Limited

    About this entry

    Check for updates. Verify currency and authenticity via CrossMark

    Cite this entry

    Sweeting, A. (2019). Secondary Markets. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_3054-1

    Download citation

    • DOI: https://doi.org/10.1057/978-1-349-95121-5_3054-1

    • Received:

    • Accepted:

    • Published:

    • Publisher Name: Palgrave Macmillan, London

    • Print ISBN: 978-1-349-95121-5

    • Online ISBN: 978-1-349-95121-5

    • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

    Publish with us

    Policies and ethics

    Search

    Navigation