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Third party evaluations and resale prices in the US used vehicle market

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  • Amanda Hollenbacher
  • David Yerger

Abstract

This paper examines the impact upon used vehicle resale prices in the USA from the annual reliability evaluations done by Consumer Reports magazine. In contrast to prior work finding no announcement effects upon prices from the evaluations, this study finds significant announcement effects. Vehicles in the subcompact/compact category experience an increase in their annual rate of depreciation relative to comparable vehicles following a negative evaluation by Consumer Reports. These results are consistent with the behaviour of rational consumers operating in a market with asymmetric information problems.

Suggested Citation

  • Amanda Hollenbacher & David Yerger, 2001. "Third party evaluations and resale prices in the US used vehicle market," Applied Economics Letters, Taylor & Francis Journals, vol. 8(6), pages 415-418.
    • Handle: RePEc:taf:apeclt:v:8:y:2001:i:6:p:415-418
    DOI: 10.1080/135048501750237883
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    Cited by:

    1. Vollaard, Ben & van Ours, Jan C., 2022. "Bias in expert product reviews," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 105-118.
    2. Rroshi, Daniela & Weichselbaumer, Michael, 2021. "What is in a price? Evidence on quality signaling for experience goods," Department of Economics Working Paper Series 311, WU Vienna University of Economics and Business.
    3. Gilmore, Elisabeth A. & Lave, Lester B., 2013. "Comparing resale prices and total cost of ownership for gasoline, hybrid and diesel passenger cars and trucks," Transport Policy, Elsevier, vol. 27(C), pages 200-208.

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