<p>Interesting observation. Perhaps a part of the answer lies in Akerlof's <a href="http://www.econ.yale.edu/~dirkb/teach/pdf/akerlof/themarketforlemons.pdf" rel="nofollow noreferrer">lemons' problem</a>? </p>

<p>Admittedly judging the quality of a 2nd hand bike is easier than that of a car, but from what you're describing in the US there doesn't seem to be a well functioning market for 2nd hand bikes in the US. Moreover, bikes are becoming more and more like cars in that respect with all the gadgets and technology that one cannot fix in their own shed or backyard. </p>

<p>Perhaps it also plays a role that US citizens are not used to bikes and therefore have a harder time judging their quality (just guessing here, and perhaps stereotyping too much). Here in the Netherlands we seem to have a well-functioning market for them that serve all segments (including, I might add, a high theft rate), but everyone rides a bike here, so we should be better at judging their quality.</p>

CC BY-SA 3.0
2017-09-20T11:57:57.000Z
With regard to "lemons", I'll note that we see a very distinct "ridden once; put away" (ROPW) phenomenon with some of these bikes -- a bike is purchased, ridden at most a handful of times, then "put away" in its (semi-permanent) storage place.  This can be seen by the lack of wear one the bike.  When examined, maybe a third of these bikes have some obvious problem (a department-store bike assembled incorrectly, eg), but others are perfectly fine, save for any problems acquired during storage.  Basically, the rider decided they didn't really want a bike after all (or were "too busy" to use it).
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CC BY-SA 4.0
2020-03-11T06:43:27.873Z
"ridden once; put away"  is known as ROPA, or a bike that rarely comes out can be termed a "Garage Queen or Princess"
Criggie
CC BY-SA 3.0
2017-09-20T07:38:24.420Z
2017-09-20T07:38:24.420Z
Maarten Punt
<p>Probably the answer to this question is "business as usual", but I've observed of late that the market for bicycles is pretty weird.</p>

<p>You can buy a brand new factory-produced bicycle in the US (I'm really only talking about the US here) for anywhere from \$50 (when not on sale) to maybe \$10,000 (depending on where you want to draw the line between "production" and "custom" bikes).  Some of this difference is due to actual quantifiable value -- the more expensive bikes generally are lighter, handle better, have advanced features, and are marginally more durable (though the cheap bikes are remarkably durable).  However, much of the difference is clearly "glitz" -- the latest features, fancy (though oddly impractical) arrangements of spokes in the wheels, etc.</p>

<p>More to my point, however, is what happens to the value of a bike once you "drive it off the lot".  A "moderately priced" bike (say \$500-1000) will lose (very rough figures -- I've not done any rigorous research) maybe 50% of its value each year, such that it's market value (if in perfect condition) is less than \$50 after 5 years.  The net result is that lower-end bikes are not deemed worth selling when unused, and they tend to accumulate (even worse than other possessions) in basements, garages, and backyard sheds.</p>

<p>I became involved in this "market" because I work with a small group which reconditions used bikes and distributes them to various charities (primarily Christmas Anonymous).  Our small group, consisting of about 8 active members working two afternoons a week 8 months out of the year, manages to rehabilitate 200-300 bikes a year.  But we get donations of at least twice that amount, with the surplus being sold for scrap.  Currently we have so many bikes that many must be stored outside, and it is somewhat disheartening to see, say, a very nice looking bike in good condition, which sold originally for maybe $800, standing in a field of weeds, rusting away.</p>

<p>So I get to thinking that there must be <em>some</em> economic principle at work here, beyond simple supply-and-demand, to cause such a skewed market.  Why can something of such inherent value (and so highly valued by the purchaser when new) become valueless so rapidly?  But I admit that not only do I not have a clue what it might be, but I find myself failing to even describe my perplexity adequately.</p>

<p>What principles are at work here?  Is there anything "interesting" or instructive in the scenario?</p>

<p>(I'm guessing that many will instantly shout "Technology!" -- that technology makes last year's bike much less valuable -- question answered!.  But I've observed that "technology" is the last (or is it first?) refuge of scoundrel economists -- technology hardly ever has the economic effect claimed.)</p>

CC BY-SA 3.0
2017-09-27T03:55:08.140Z
I've noticed the same problem in Sydney - I wanted to buy a used bike but very little shops sell it, and the few that do have restored to the semi-new level (completely new paint job, breaks, rims, etc.). You can barely find used average bikes: only new ones from China, in Target, for 80 AUD, or the new and semi-new ones for 600$+
JoaoBotelho
CC BY-SA 3.0
2017-09-27T11:43:24.490Z
@JoaoBotelho - I haven't closely checked local bike shops recently, but my impression in the US is somewhat similar in that 10-20 years ago most shops carried a modest collection of good trade-ins, but the selection had diminished if not disappeared entirely.  However, bikes are still available from garage sales and the like (though likely in lower numbers than before).
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<microeconomics><reference-request>
Depreciation and second-hand markets for bicycles
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# Depreciation and second-hand markets for bicycles

(Asked by: username_0 on 2017-09-20)

Probably the answer to this question is "business as usual", but I've observed of late that the market for bicycles is pretty weird.

You can buy a brand new factory-produced bicycle in the US (I'm really only talking about the US here) for anywhere from \$50 (when not on sale) to maybe \$10,000 (depending on where you want to draw the line between "production" and "custom" bikes). Some of this difference is due to actual quantifiable value -- the more expensive bikes generally are lighter, handle better, have advanced features, and are marginally more durable (though the cheap bikes are remarkably durable). However, much of the difference is clearly "glitz" -- the latest features, fancy (though oddly impractical) arrangements of spokes in the wheels, etc.

More to my point, however, is what happens to the value of a bike once you "drive it off the lot". A "moderately priced" bike (say \$500-1000) will lose (very rough figures -- I've not done any rigorous research) maybe 50% of its value each year, such that it's market value (if in perfect condition) is less than \$50 after 5 years. The net result is that lower-end bikes are not deemed worth selling when unused, and they tend to accumulate (even worse than other possessions) in basements, garages, and backyard sheds.

I became involved in this "market" because I work with a small group which reconditions used bikes and distributes them to various charities (primarily Christmas Anonymous). Our small group, consisting of about 8 active members working two afternoons a week 8 months out of the year, manages to rehabilitate 200-300 bikes a year. But we get donations of at least twice that amount, with the surplus being sold for scrap. Currently we have so many bikes that many must be stored outside, and it is somewhat disheartening to see, say, a very nice looking bike in good condition, which sold originally for maybe $800, standing in a field of weeds, rusting away.

So I get to thinking that there must be *some* economic principle at work here, beyond simple supply-and-demand, to cause such a skewed market. Why can something of such inherent value (and so highly valued by the purchaser when new) become valueless so rapidly? But I admit that not only do I not have a clue what it might be, but I find myself failing to even describe my perplexity adequately.

What principles are at work here? Is there anything "interesting" or instructive in the scenario?

(I'm guessing that many will instantly shout "Technology!" -- that technology makes last year's bike much less valuable -- question answered!. But I've observed that "technology" is the last (or is it first?) refuge of scoundrel economists -- technology hardly ever has the economic effect claimed.)

**Tags:** microeconomics, reference-request
> **Comments:**
> **username_1**: I've noticed the same problem in Sydney - I wanted to buy a used bike but very little shops sell it, and the few that do have restored to the semi-new level (completely new paint job, breaks, rims, etc.). You can barely find used average bikes: only new ones from China, in Target, for 80 AUD, or the new and semi-new ones for 600$+  
> **username_0**: @JoaoBotelho - I haven't closely checked local bike shops recently, but my impression in the US is somewhat similar in that 10-20 years ago most shops carried a modest collection of good trade-ins, but the selection had diminished if not disappeared entirely.  However, bikes are still available from garage sales and the like (though likely in lower numbers than before).  

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## 1 answers

### Answer by username_2 on 2017-09-20. Score: 4

Interesting observation. Perhaps a part of the answer lies in Akerlof's [lemons' problem](http://www.econ.yale.edu/~dirkb/teach/pdf/akerlof/themarketforlemons.pdf)?

Admittedly judging the quality of a 2nd hand bike is easier than that of a car, but from what you're describing in the US there doesn't seem to be a well functioning market for 2nd hand bikes in the US. Moreover, bikes are becoming more and more like cars in that respect with all the gadgets and technology that one cannot fix in their own shed or backyard.

Perhaps it also plays a role that US citizens are not used to bikes and therefore have a harder time judging their quality (just guessing here, and perhaps stereotyping too much). Here in the Netherlands we seem to have a well-functioning market for them that serve all segments (including, I might add, a high theft rate), but everyone rides a bike here, so we should be better at judging their quality.

> **Comments:**
> **username_0**: With regard to "lemons", I'll note that we see a very distinct "ridden once; put away" (ROPW) phenomenon with some of these bikes -- a bike is purchased, ridden at most a handful of times, then "put away" in its (semi-permanent) storage place.  This can be seen by the lack of wear one the bike.  When examined, maybe a third of these bikes have some obvious problem (a department-store bike assembled incorrectly, eg), but others are perfectly fine, save for any problems acquired during storage.  Basically, the rider decided they didn't really want a bike after all (or were "too busy" to use it).  
> **username_3**: "ridden once; put away"  is known as ROPA, or a bike that rarely comes out can be termed a "Garage Queen or Princess"  

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