Wednesday, August 19, 2009

The economics of second-hand bikes

Posted on Reuters by Felix Salmon:

If Robin Goldstein went to the trouble of collecting 700 datapoints off Craigslist for a single blog entry, I thought the least I could do was turn it into a pretty scatterchart for him:


What we’re looking at here is the average price of a used car in each metro area, on the x-axis, against the average price of a used bike, on the y-axis. As Goldstein says:

Not one city fell out of line in the inverse order. Where cars were selling for the most, bikes were selling for the least; where cars were selling for the least, bikes were selling for the most; and so on, inversely, in between.

The really weird thing is that the cities with the most bikes, like Portland, also have the most expensive bikes:

I know this is sort of quaint, but the last time I bought a bike, I think I spent $35 and it wasn’t hot. It was a road bike; it had 18 speeds, I think; it squeaked; and it served my needs (biking from my house to school every day) perfectly well…

The guy in the store asked me how much I wanted to spend…

He had something super-cheap for me, an old road bike that they’d fixed up. It wasn’t exactly my size, but it would do. It was a 1991 model, a Trek, I think. It was in good working condition, it had some newer components, and it came with a warranty. I could have it, he said, for $475.

I’m with Robin: this makes no sense. You can buy a really nice new bike for less than that — and new bikes cost the same no matter where in the country you buy them. They also have brand-new components, and component technology has been improving a lot of late. The only real problem with a new bike is that it’s a bit more attractive to thieves.

Still, the second-hand bike dealers are clearly on to a good thing, and there does seem to be an implicit understanding among them that they’re not going to compete on price. So this state of affairs might well last indefinitely.

1 comment:

Anonymous said...

He might have tried correlating the average temperature with the existence of an active second-hand market.

If it is 110F in the shade, a bicycle in Phoenix looks like the quickest way to a heart-attack.

No wonder they are sold at a discount!