Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games∗ Masakazu Ishiharay Andrew Ching Stern School of Business Rotman School of Management New York University University of Toronto This draft: April 21, 2016 ∗We have benefited from discussions with Sridhar Moorthy, Ron Borkovsky, Victor Aguirregabiria, Harikesh Nair, Avi Goldfarb, Susumu Imai, Nitin Mehta, Mengze Shi, Tanjim Hossain, David Soberman, Ig Horstmann, Andy Mitchell, Alon Eizenberg, Christos Genakos, Benjamin Shiller. We also thank seminar and conference participants at U of Toronto, Erasmus School of Economics, NYU, U of Michigan, U of Rochester, UT-Dallas, UBC, NUS, HKUST, Washington University-Saint Louis, OSU, UCLA, Columbia, Northwestern, UCSD, McMaster, UC Berkeley, Stanford, Chicago, 2009 Marketing Dynamics Conference, 2010/2012 IIOC, 2012 CKGSB Marketing Research Forum, 2012 NBER Summer Institute Economics of IT and Digitization Workshop, 2014 Society for Economic Dynamics Conference, and 2015 ZEW Conference for their helpful comments. All remaining errors are ours. yPlease direct all correspondence to Masakazu Ishihara, Stern School of Business, New York University. Email: mishi-
[email protected]. Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games Abstract For information/digital products, the used goods market has been viewed as a threat by producers. However, it is not clear if this view is justified because the used goods market also provides owners with an opportunity to sell their products. To investigate the impact of the used goods market on new goods sales, we collect a unique data set from the Japanese video game market.