Used game sales

A study suggest that preventing used game sales would cut game companies profits unless the game prices are lowered: “We find that this policy would reduce the average profits per game by 10% if publishers do not adjust their prices. However, if they adjust prices optimally, it would increase the average profits per game by 19%”They base the claim on data from Japan.

Ishira and Ching also notes that “We also find evidence that consumers are forward-looking, suggesting that the future resale opportunity could increase consumers’ willingness-to-pay for new copies.”1

With a quick look at the report, the assumptions seems to well formulated (I did not went through the report in detail; it has 63 pages and plenty of math, so detailed reading would take some time).

References

  1. Ishihara & Ching, 2012, Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games, Rotman School of Management Working Paper No. 2189871, http://ssrn.com/abstract=2189871 (full report available on the page).
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