The Cannibalization Effects of New Product Preannouncement and Launch on the C2C Marketplace

This paper aims to investigate whether and how the introduction of a new product impacts the consumer behaviors on the C2C marketplace. We take iPhone preannouncement and launch as a case to examine whether there is the cannibalization effect on existing Apple iPod product and Microsoft Zune on eBay. Difference-in-Differences (DID) Model is applied as the main econometrical analysis methods in this empirical study. We collected all the bidding records from December 10th 2006 to August 20th 2007 (including the date of iPhone preannouncement January 9th 2007 and its launching into the market June 29th 2007) for DID analysis. Our analysis results show that new product introduction cannibalizes the other existing products of the same firm; the preannouncement and the launching of new product both promote the occurrence of cannibalization; specifically, new product cannibalizes the most recent version of existing products more significantly than others.

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