Economics of buying a second-hand bike

geodesic

Folks,

Having been looking for a second-hand road bike for a while, I'm a bit perplexed how the economics of this market actually function. Particularly how the BTW scheme effects the valuations, or whether it does so at all. And if not, is there ever any point in going second-hand?

Are used road bikes closer to fine wines or art, appreciating with age, than your normal depreciating asset like a car or a laptop?

I ask because the typical pattern I've seen is for 1-3 year old bikes costing in the range €1,000-€1,200 gross when new, or €500-€700 under the BTW scheme, to be offered for sale at €700-€900, which represents a net appreciation to the seller (assuming they availed of the BTW scheme when purchasing).

Since these bikes tend to entry-level models, it seems highly likely the original owner and any potential buyers would both be eligible for the BTW, not having purchased a different bike in the previous 5 years (otherwise they wouldn't have been interested in an entry-level bike).

Given the advantages of a new purchase from an LBS (exact fit, up-to-date spec, full choice of models, after-sales service) I'm stumped as to how second-hand market even functions?

Can anyone enlighten me, as I feel I'm missing something fairly obvious here.

Thanks!

TheBlaaMan

• Not everyone is able to avail of BtW => you never know what a seller has paid unless s/he produces receipts
• Entry level bikes reach 'rock bottom' price quite quickly and in any case depreciation is low, far less than cars.
• There appear to be lots of sellers who avail of the BtW discount simply to flip the bike quickly and bag a profit - IMO if a whole load of extras are being offered this is a sign of this.
• Some brands (Giant, Trek come to mind) gain a pemium even s/h. As to whether this is deserved or not is a moot point

emmett12

You will find some super deals on second hand bikes because the fact some racers change their bike every 2 years or so they use the money from the sale to fund the next purchase sometimes you can get a bike that retail well over 3000 new for under 1600 on second hand market with alot better spec than a new bike at that price

Cee-Jay-Cee

geodesic wrote: »

I ask because the typical pattern I've seen is for 1-3 year old bikes costing in the range €1,000-€1,200 gross when new, or €500-€700 under the BTW scheme, to be offered for sale at €700-€900, which represents a net appreciation to the seller (assuming they availed of the BTW scheme !

Are you suggesting people should sell bikes they bought on the BTW scheme cheaper just because they cost them less originally?

My first bike was priced at €1100 in my LBS. I haggled and got it for €900 on the. Btw scheme, and as I'm on the higher tax rate it only cost me approx €450. I'm not selling it but if I was I'd value it at approx €600-700 because that's what it's worth. What I paid for it is irrelevant just like if I was selling a house or a car.

I bought my Felt F5 second hand but was very very fortunate and actually bought a new bike as the owner hadn't used it bar maybe cycling it around his back yard, if even that much. It was absolutely as new with out so much as dust on it and even had all the yellow warning stickers still on the frame, seat post, chain stays etc. I paid €950 for the bike but sold the wheels from it for €100 so all In it cost me €850.

I think it makes much more economic sense to buy second hand. There are so many people who buy bikes, don't take to cycling like most and look to sell on nearly new bikes at a much reduced rate. Most won't be as lucky as I was but there are good deals out there on adverts and Donedeal etc etc

geodesic

emmett12 wrote: »

You will find some super deals on second hand bikes because the fact some racers change their bike every 2 years or so they use the money from the sale to fund the next purchase sometimes you can get a bike that retail well over 3000 new for under 1600 on second hand market with alot better spec than a new bike at that price

True enough, at the rarefied levels of €3k+ bikes, the €500 max savings under the BtW scheme would make far less of an impact.

geodesic

CJC999 wrote: »

Are you suggesting people should sell bikes they bought on the BTW scheme cheaper just because they cost them less originally?

Well more that the any potential buyer would also be able to avail of the BtW scheme and isn't going to be prepared to pay more for a 2nd hand bike that they would have to for new.

IIUC it's the not seller who decides how much their bike is worth (well not if they actually want to find a buyer anyhow).

Rather the value is determined by how much a buyer is willing to pay, no?

CJC999 wrote: »

My first bike was priced at €1100 in my LBS. I haggled and got it for €900 on the. Btw scheme, and as I'm on the higher tax rate it only cost me approx €450. I'm not selling it but if I was I'd value it at approx €600-700 because that's what it's worth. What I paid for it is irrelevant just like if I was selling a house or a car.

Well the analogy to a house or car only works if there also was a massive tax incentive distorting that market.

If you paid €250k for a new house, but the state kicked in €100k of the purchase price, do you think you'd have buyers lined up around the block willing the take the house off your hands for significantly more that the €150k net you paid for it?

(assuming they themselves had the option to avail of their €100k kick-back)

ford2600

geodesic wrote: »

True enough, at the rarefied levels of €3k+ bikes, the €500 max savings under the BtW scheme would make far less of an impact.

Purchased a cube mtb, 3 years old last year, but never used for 400, new price 1400. Wouldn't sell for under 600

Bought a Giant Defy for friend, which cost 999 for 500 with 100km on bike

Looking for bike for my wife at moment, value there in the middle of all the junk

Lumen

geodesic, why don't you buy a new bike on the BTW scheme instead?

Wishbone Ash

geodesic wrote: »

Well more that the any potential buyer would also be able to avail of the BtW scheme and isn't going to be prepared to pay more for a 2nd hand bike that they would have to for new

2 points:

1. Many potential buyers are not eligible for the BTW scheme.
2. A potential buyer may have availed of the BTW scheme but wishes to upgrade/change but can't avail of the BTW scheme again for 5 years.

geodesic

Lumen wrote: »

geodesic, why don't you buy a new bike on the BTW scheme instead?

Yeah, fair point, I'm thinking I'll end up doing that all right.

I'm eligible, but my workplace isn't the most proactive about making such things happen. They'll do it all right, but need to be pushed and nagged about it.

So I was thinking that just picking up something secondhand would be a lower-hassle alternative to doing such pushing and nagging of the payroll folks. But I'm realizing that reasoning doesn't make much financial sense.

geodesic

Wishbone Ash wrote: »

2 points:

1. Many potential buyers are not eligible for the BTW scheme.
2. A potential buyer may have availed of the BTW scheme but wishes to upgrade/change but can't avail of the BTW scheme again for 5 years.

Yep, true dat.

I was making an assumption that anyone interested in buying an entry-level bike would (a) not already be a practicing cyclist, and also (b) have gainful employment (since dropping that kind of cash on a hobby wouldn't seem to be an option for someone without a solid income).

But of course I could have been wrong on both counts.

geodesic

ford2600 wrote: »

Purchased a cube mtb, 3 years old last year, but never used for 400, new price 1400. Wouldn't sell for under 600

Bought a Giant Defy for friend, which cost 999 for 500 with 100km on bike

Looking for bike for my wife at moment, value there in the middle of all the junk

Haha, well put!

Sounds like your patience paid off with a couple of very nice purchases.

Maybe patience is what I've been lack the last couple weeks that I've been actively looking.

geodesic

TheBlaaMan wrote: »

• Not everyone is able to avail of BtW => you never know what a seller has paid unless s/he produces receipts

True enough, I was thinking more that most potential buyers would have the option to go on the BTW.

TheBlaaMan wrote: »

• Entry level bikes reach 'rock bottom' price quite quickly and in any case depreciation is low, far less than cars.

Did not know there was a "floor" in secondhard bike prices and a slow rate of depreciation ... good to know, thanks!

TheBlaaMan wrote: »

• There appear to be lots of sellers who avail of the BtW discount simply to flip the bike quickly and bag a profit - IMO if a whole load of extras are being offered this is a sign of this.

Yeah, BTW I wasn't suggesting that such flipping is the norm.

TheBlaaMan wrote: »

• Some brands (Giant, Trek come to mind) gain a pemium even s/h. As to whether this is deserved or not is a moot point

Yeah never really understood how brands like Trek & Specialized seem to be more sought after than say Cube or Stevens.

rollingscone

geodesic wrote: »

True enough, I was thinking more that most potential buyers would have the option to go on the BTW.



Did not know there was a "floor" in secondhard bike prices and a slow rate of depreciation ... good to know, thanks!



Yeah, BTW I wasn't suggesting that such flipping is the norm.



Yeah never really understood how brands like Trek & Specialized seem to be more sought after than say Cube or Stevens.

Specialized have cornered the Goth cyclist market...because you know...evil.

Cee-Jay-Cee

geodesic wrote: »

Well more that the any potential buyer would also be able to avail of the BtW scheme and isn't going to be prepared to pay more for a 2nd hand bike that they would have to for new.

IIUC it's the not seller who decides how much their bike is worth (well not if they actually want to find a buyer anyhow).

Rather the value is determined by how much a buyer is willing to pay, no?



Well the analogy to a house or car only works if there also was a massive tax incentive distorting that market.

If you paid €250k for a new house, but the state kicked in €100k of the purchase price, do you think you'd have buyers lined up around the block willing the take the house off your hands for significantly more that the €150k net you paid for it?

(assuming they themselves had the option to avail of their €100k kick-back)

I get what your saying but first of all not everyone can buy on the btw scheme and as it's only every 5 years there are many who have availed of it but want to change their bikes within that time.

As for pricing a bike bought on the scheme, like it or not what the bike costs them originally is still irrelevant and I can safely say I have never seen or likely to see a seller advertising the fact that the bike was a btw purchase and pricing it based on a depreciated value of the original cost to them.

The seller dictates the asking price. The buyer dictates the selling price. Most people have a price in mind and allow haggle room when setting a price.

I really can't see how you can justify the thought that someone selling a bike should sell it at a reduced cost because they bought it on the scheme and so got a potential 52% discount on the price. Life just doesn't work that way.

geodesic

CJC999 wrote: »

I really can't see how you can justify the thought that someone selling a bike should sell it at a reduced cost because they bought it on the scheme and so got a potential 52% discount on the price. Life just doesn't work that way.

Again the point wasn't that the seller should (in some moral sense) price the bike to reflect the discount got when originally purchasing the bike, more that many (possibly most) potential buyers would be pricing the discount still available to them on a new bike into any offers they might, or not make.

I'm no economist, but I think you'd be hard pressed to find one who would agree that a large discount available only on a new asset purchase wouldn't distort the pricing of second-hand assets in some way.

Lumen

The limit case is that anyone eligible for BTW will take it, such that they're out of the market for second hand bikes.

The effect in that case is to increase the supply of second hand bikes (because more new ones are being bought) and decrease the demand for second hand bikes (because those eligible people aren't in the market).

More supply + less demand = lower prices.

It's worth bearing in mind that the cost of owning a bike is very low, and people prefer not to realise a loss even if that means realising a larger loss in the future. As a consequence, many sellers are unrealistic about asking prices.

geodesic

Lumen wrote: »

The limit case is that anyone eligible for BTW will take it, such that they're out of the market for second hand bikes.

The effect in that case is to increase the supply of second hand bikes (because more new ones are being bought) and decrease the demand for second hand bikes (because those eligible people aren't in the market).

More supply + less demand = lower prices.

It's worth bearing in mind that the cost of owning a bike is very low, and people prefer not to realise a loss even if that means realising a larger loss in the future. As a consequence, many sellers are unrealistic about asking prices.

Thanks Lumen, well reasoned.

He's no Phil Liggett, but might be a Paul Krugman

Lumen

geodesic wrote: »

He's no Phil Liggett, but might be a Paul Krugman

Krugman would interpret the falling prices of used bikes as a sign of a demand-shock recession exacerbated by Austrian austerity economics, and call for government to buy everyone a bike in order to stimulate demand and avert a full-blown deflationary death spiral.

I await my Nobel price for posting crap on the internet.

ROK ON

Lumen wrote: »

Krugman would interpret the falling prices of used bikes as a sign of a demand-shock recession exacerbated by Austrian austerity economics, and call for government to buy everyone a bike in order to stimulate demand and avert a full-blown deflationary death spiral.

I await my Nobel price for posting crap on the internet.

2.2 The simple Romer–Taylor model (i = 0; j = 1)
The attraction of the R–T model is its simplicity and ease of diagrammatic explanation.
Since i = 0 and j = 1, the IS and PC equations are
xt = −a(rt − rS,t) (IS equation)
πt = πt−1 + αxt−1. (PC equation)
Instead of assuming that the central bank optimizes in choosing its interest rate rule,
the R–T model assumes an interest rate rule of the form
rt = γπt. (IR equation)
The interest rate formof the monetary rulemay be easily changed into a relationship
between xt and πt by substituting the IR equation into the IS equation to get
xt = arS,t − aγπt, (AD equation)
which is a downward sloping line in the Phillips curve diagram. With arS,t =
At − ye = 0, the AD equation goes through (x = 0, π = πT = 0). A permanent
positive aggregate demand shock implies that At > ye and so rS,t > 0, which shifts
the curve up permanently.
Equilibrium. The equilibrium of the model is easily derived. Stable inflation
requires output at equilibrium, i.e. x = 0. This implies from the AD equation that
the inflation rate at equilibrium, πe, is as follows:
πe = rS,t/γ = (At − ye) /aγ.
Thus in this model inflation at the constant inflation equilibrium differs from the
inflation target whenever At = ye.
Adjustment to equilibrium. The lag structure of the model makes it particularly
simple to follow the consequences of a demand shock. The demand shock in t
raises output in t without initially affecting inflation since inflation responds to last
period’s output. Since the interest rate only responds to inflation, the period t CB
does not respond to the demand shock in period t. In period t+1, inflation increases
as a lagged response to the increased output in t; the period t+1 CB increases rt+1
and hence reduces xt+1. This then reduces inflation in t + 2, and so on.
Drawbacks. Appealing though the simplicity of the model is, it has three drawbacks:
1. The interest rate rule is not chosen through optimizing behaviour by the central
bank.

2. Since πe = (At − ye)/aγ, then if At − ye > 0, inflation in equilibrium is
above the target, i.e. πe > πT and conversely for A − ye < 0, inflation in
equilibrium is below the target, πe < πT .4
3. If the slope of the Phillips curve α is less than the absolute value of the slope
of the AD curve, 1/aγ, and if the economy starts from π0 = 0, then for the
initial demand-induced increase in inflation, π1, π1 < πe. Thus the tighter
monetary policy will push inflation up from π1 to πe. This is because π1 =
α(A − ye) while πe = (A − ye)/aγ.

_

---

Dude

You are so late to the party - they have already handed out the prizes for this crap.

Buzwaldo

ROK ON wrote: »

2.2 The simple Romer–Taylor model (i = 0; j = 1)
The attraction of the R–T model is its simplicity and ease of diagrammatic explanation.
Since i = 0 and j = 1, the IS and PC equations are
xt = −a(rt − rS,t) (IS equation)
πt = πt−1 + αxt−1. (PC equation)
Instead of assuming that the central bank optimizes in choosing its interest rate rule,
the R–T model assumes an interest rate rule of the form
rt = γπt. (IR equation)
The interest rate formof the monetary rulemay be easily changed into a relationship
between xt and πt by substituting the IR equation into the IS equation to get
xt = arS,t − aγπt, (AD equation)
which is a downward sloping line in the Phillips curve diagram. With arS,t =
At − ye = 0, the AD equation goes through (x = 0, π = πT = 0). A permanent
positive aggregate demand shock implies that At > ye and so rS,t > 0, which shifts
the curve up permanently.
Equilibrium. The equilibrium of the model is easily derived. Stable inflation
requires output at equilibrium, i.e. x = 0. This implies from the AD equation that
the inflation rate at equilibrium, πe, is as follows:
πe = rS,t/γ = (At − ye) /aγ.
Thus in this model inflation at the constant inflation equilibrium differs from the
inflation target whenever At = ye.
Adjustment to equilibrium. The lag structure of the model makes it particularly
simple to follow the consequences of a demand shock. The demand shock in t
raises output in t without initially affecting inflation since inflation responds to last
period’s output. Since the interest rate only responds to inflation, the period t CB
does not respond to the demand shock in period t. In period t+1, inflation increases
as a lagged response to the increased output in t; the period t+1 CB increases rt+1
and hence reduces xt+1. This then reduces inflation in t + 2, and so on.
Drawbacks. Appealing though the simplicity of the model is, it has three drawbacks:
1. The interest rate rule is not chosen through optimizing behaviour by the central
bank.

2. Since πe = (At − ye)/aγ, then if At − ye > 0, inflation in equilibrium is
above the target, i.e. πe > πT and conversely for A − ye < 0, inflation in
equilibrium is below the target, πe < πT .4
3. If the slope of the Phillips curve α is less than the absolute value of the slope
of the AD curve, 1/aγ, and if the economy starts from π0 = 0, then for the
initial demand-induced increase in inflation, π1, π1 < πe. Thus the tighter
monetary policy will push inflation up from π1 to πe. This is because π1 =
α(A − ye) while πe = (A − ye)/aγ.

_

---

Dude

You are so late to the party - they have already handed out the prizes for this crap.

What!

Lumen

Buzwaldo wrote: »

What!

ROK_ON has learned how to copy and paste on his phone.

ROK ON

Lumen wrote: »

ROK_ON has learned how to copy and paste on his phone.

Nope.
Thats on the laptop.
I figured out how to copy and paste on the phone, just not write, spell correctly and follow appropriate use of grammar.

@Buzwaldo - I just assumed that this was an economics thread. The macro model contained is a variant of a new Keynesian model explaining how fiscal and monetary policy interact through interest rates. During a very tortuous MA in economics I was forced to read this drivel from Romer and Mankiw. I never thought I would encounter new Keynsian economics on 410.

Thats all.

Buzwaldo

ROK ON wrote: »

Nope.
Thats on the laptop.
I figured out how to copy and paste on the phone, just not write, spell correctly and follow appropriate use of grammar.

@Buzwaldo - I just assumed that this was an economics thread. The macro model contained is a variant of a new Keynesian model explaining how fiscal and monetary policy interact through interest rates. During a very tortuous MA in economics I was forced to read this drivel from Romer and Mankiw. I never thought I would encounter new Keynsian economics on 410.

Thats all.

Ok so.

mossym

geodesic wrote: »

Rather the value is determined by how much a buyer is willing to pay, no?

no, the value is set by the point where supply and demand is roughly in equilibrium.

What you are asking people to do would skew the real value the bikes. Say someone hadn't bought through the b2w scheme, they would then be forced to sell at the lower price.

if you think of fair market value, your desire to get a double break on the benefits does as much to skew the value as the profiteering you're opposed to

geodesic

mossym wrote: »

no, the value is set by the point where supply and demand is roughly in equilibrium.

Which is precisely the same thing as the price a buyer is willing to pay, no?

Or do you think the magic hand of the market forces people to do stuff that they're otherwise unwilling to do?

mossym wrote: »

What you are asking people to do would skew the real value the bikes. Say someone hadn't bought through the b2w scheme, they would then be forced to sell at the lower price.

Again I'm not asking people to do anything. I'm just wondering how the market dynamic works (or doesn't work).

mossym wrote: »

if you think of fair market value, your desire to get a double break on the benefits does as much to skew the value as the profiteering you're opposed to

How, pray tell, am I seeking a double break on the benefits?

And I couldn't give two hoots about people profiteering as you call it, this thread wasn't meant to have a moralistic tone. My point was simply that such profiteering would be impossible if all potential sellers of BtW-subsidized bikes only had access to a pool of potential buyers who could also avail of the same subsidy (which is clearly not exactly the case in reality, for the sane reasons set out above by other posters).

ROK ON

Theres a behavioural paper in this lads.

mossym

geodesic wrote: »

Which is precisely the same thing as the price a buyer is willing to pay, no?

not really. If that was the case, if everyone in the world decided they wanted a ferrari,and got together and said they were only going to pay ten euros for a ferarri, do you then think ferarri would start selling cars at that price? No. The market for ferraris would collapse and none would sell. what people are willing to pay is only one factor that feeds into market equlibrium.

geodesic wrote: »

Or do you think the magic hand of the market forces people to do stuff that they're otherwise unwilling to do?
.

i'm suprised anyone living in ireland for the last 10 years questions that.

geodesic wrote: »

Again I'm not asking people to do anything. I'm just wondering how the market dynamic works (or doesn't work).

okay, apologies then, not asking, just surprised that they're not doing it

geodesic wrote: »

How, pray tell, am I seeking a double break on the benefits?

you;ve suggested the buyer of a second hand bike should also be able to benefit from the btw benefits, when buying a bike that has already had them applied?

geodesic wrote: »

Which is precisely the same thing as the price a buyer is willing to pay, no?

Or do you think the magic hand of the market forces people to do stuff that they're otherwise unwilling to do?



Again I'm not asking people to do anything. I'm just wondering how the market dynamic works (or doesn't work).



How, pray tell, am I seeking a double break on the benefits?

And I couldn't give two hoots about people profiteering as you call it, this thread was mean to have a moralistic tone. My point was simply that such profiteering would be impossible if all potential sellers of BtW-subsidized bikes only had access to a pool of potential buyers who could also avail of the same subsidy (which is clearly not exactly the case in reality, for the sane reasons set out above by other posters).

i don;t call it profiteering. you've suggested they are selling it for above what they are worth given what they have paid, that is profiteering.

i think your last statement answers your own original question. your reasoning stands firm with the exception of the market abnormalities, those that don't have the same purchasing power as others. These will always have a large effect on any market, in one direction or another. in this case, they are those that can't get a btw, or in a lot of cases, those that bought badly on their first purchase and are looking to upgrade within the five year window.

Lumen

We need a Bicycle Price Register.

geodesic

mossym wrote: »

okay, apologies then, not asking, just surprised that they're not doing it

True enough, buyers do tend to act in irrational ways when whipped up into a frenzy by a compliant media drunk on the revenue from their property sections.

Not much whipping up of a pro-cycling frenzy going though that I've noticed (apart from lots of ad on UTV featuring Italian lads clad mainly in pink whizzing past the Giant's Causeway on carbon bikes )

mossym wrote: »

you;ve suggested the buyer of a second hand bike should also be able to benefit from the btw benefits, when buying a bike that has already had them applied?

I'm struggling to see how that would be a double benefit to the secondhand purchaser. The tax savings are not applied a second time, and the Revenue doesn't lose out.

mossym wrote: »

i don;t call it profiteering. you've suggested they are selling it for above what they are worth given what they have paid, that is profiteering.

Again I don't want to be moralistic. I didn't bring up the profiteering phrase, and don't think it's really appropriate in this case, as it usually carries connotations of price-fixing, or compulsion, or cornering the market in some way. None of which apply in this case (the potential buyers are perfectly free to buy a new bike themselves, those factories in Taiwan are still churning them out good-o).

mossym wrote: »

i think your last statement answers your own original question. your reasoning stands firm with the exception of the market abnormalities, those that don't have the same purchasing power as others. These will always have a large effect on any market, in one direction or another. in this case, they are those that can't get a btw, or in a lot of cases, those that bought badly on their first purchase and are looking to upgrade within the five year window.

Yeah that seems to be the key all right, there must be a substantial number of potential buyers who are unable to secure the same subsidy.

ROK ON

The issue in this case in economics is a variant of Akerlofs lemons.
George Akerlof authored a paper on information asstmetry where he used the market for 2nd hand cars as a test case. A lemon is slang for a substandard car.
In Akerlofs lemons poor cars end up dominating the second hand car market. Owners of good cars are loathe to sell. Buyers do not have full info on the car.

Is the second hand bike mkt not a variant?
I may buy a bike on the btw. Sure the net cost to menus c.€480, but I as the owner know that it is a good/not so good bike for the money. I also know that the replacement cost to me is potentially greater than 480. So if I was to sell it I should price at >480.
Now, I can deduce also that the buyer may not be in a position to use the BTW, because if they cold they would buy a new undepreciated bike for net 480.

All told the seller has more information than the buyer, and this is reflected in the price of 2nd hand bikes.
It is a particular case of Akerlofs lemons.

Lumen

ROK ON wrote: »

It is a particular case of Akerlofs lemons.

I don't think so, because bikes do not contain the sort of complex systems that (badly put together) can render them lemons.

It's more like FTBer VAT exemptions on small new builds in the bubble. What was the effect of those? Possibly that the only people buying new builds were FTBers because they were bad value to anyone else.

Which ought to mean that the effect of the BTW scheme should be that the only people buying 1k bikes are BTWers, and the non-BTWers will buy used at some price lower than the natural price if there were no scheme (perhaps €700 for a 1 year old bike that was 1k new).

So maybe €600. Which is still higher than the cost to a higher rate payer.

I suppose it might be argued that people could just use the scheme to gain a couple of hundred euros by flipping a new bike, but with the 5 year rule there isn't room for repeated abuse.

ROK ON

Akerlofs lemons is not about cars or complex systems.
It is about information flows.
A market is simply a flow of information.
The OP has queried why some goods are sold at greater than a price where one might 'expect' the second hand price to be.
I am suggesting that may be due in part to information assymetries.

Either way there is enugh here to justify a paper investigating the appropriate price for second hand (ex btw) bikes and how they have impacted the general second hand market for bikes.

So pressing is the need for this research that I will be suggesting it in work in the morning.

geodesic

ROK ON wrote: »

In Akerlofs lemons poor cars end up dominating the second hand car market. Owners of good cars are loathe to sell.

Interesting thought, given the odd contradictory claims one often reads on donedeal and the likes - somehow a bike can be both "beautiful to ride" yet only actually ridden "less than 500km" since being bought a year previously.

Odd that the first owner could resist the temptation to ride such a trusty steed more often.

Lumen

ROK ON wrote: »

Akerlofs lemons is not about cars or complex systems. It is about information flows...I am suggesting that may be due in part to information assymetries.

Isn't it more a case of regulatory arbitrage vs market friction?

"Oh yes, I intend to use the bicycle for qualifying journeys".
"Didn't like that much, think I'll sell the bike".

Eventually the market closes the opportunity by moving down the price of used bikes, but the friction is the 5 year rule and the hassle of selling a used bike (e.g. morons on Adverts.ie wanting to swap your bike for a bricked Xbox 360).

..and the fact that life is too short.

edit: in case it's not abundantly clear, I have no idea what I'm talking about.

ROK ON

You can disguise it any way you like and can conclude what you like.
It is definitively not reg arb. I think that would be a person qualifying for btw 'buying' a bike on btw for a known person who does not qualify and then passing it on for whatever price - high or low.
This is about the perception that 2nd btw bikes should have greater levels of depreciation than they do.
I am suggesting that could be explained by a difference in the level of information between buyer and seller.
It is theoretically a buyers Market but practically it is not. So why would that be.

Lumen - I would suggest that you read more microeconomics. It is actually about the only area of economics outside economic history that is worthwhile. I think that you would get a kick out of a lot of the concepts.

Lumen

ROK ON wrote: »

Lumen - I would suggest that you read more microeconomics. It is actually about the only area of economics outside economic history that is worthwhile. I think that you would get a kick out of a lot of the concepts.

Great, if I manage to make it through Piketty before I die I'll be on to you for a reading list.

ROK ON

Lumen wrote: »

Great, if I manage to make it through Piketty before I die I'll be on to you for a reading list.

Why read Piketty?
Society is unequal and maybe getting more so in some countries.
Wow - I guess it sucks to be us.
Have a read of the FT article on Piketty last Friday - it's about the stages of the zeitgeist so to speak.
When you finish with the tome, if my brief synopsis doesn't manage to capture the nuance of the work then perhaps you can fill me in.

Lusk_Doyle

geodesic wrote: »

Or do you think the magic hand of the market forces people to do stuff that they're otherwise unwilling to do?

Hell yea. I'm constantly buying cycling sh1t that I really don't need!

CramCycle

Lusk_Doyle wrote: »

Hell yea. I'm constantly buying cycling sh1t that I really don't need!

Is that not the main point of cycling?