The perceived fairness and efficiency of used car markets

Pingjun Jiang

International Journal of Business Performance Management, 2008, vol. 10, issue 4, 412-433

Abstract: Two totally different sets of efficiency scores are obtained under two different consumer decision-making processes. It is found that distortions in the used car market are lower than previously thought. Cars with higher prices are perceived efficient when consumers set 'price range' as the first criterion in their purchase decision process. Lower priced cars are considered efficient if 'model year' is the first factor entering into purchase decision process. It is also found that the 'price range' decision-makers perceive a much more efficient used car market than 'model year' decision-makers. If a decision has to be made among car models within a certain price range, European and Korean car models are better choices compared to US ones. However, when making choices among cars of the same model year, US car models are better choices than European and Japanese car models. The segment of the secondary market with the older version car models tends to have a higher average efficiency, compared to the segments with newer versions. Furthermore, the high-efficiency car models are not getting the high overall ratings from customers. However, car models that are better rated by consumers are indeed charged with a higher price.

Keywords: used car markets; market efficiency; data envelopment analysis; DEA; perceived fairness; consumer decision making; purchasing decisions; automobile industry; consumer perceptions. (search for similar items in EconPapers)
Date: 2008
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