A series of recent papers have investigated the nature of trading and
sorting induced by the dynamic price mechanism in a competitive durable
good market with adverse selection and exogenous entry of traders over
time. These models are dynamic versions of Akerlof's (1970) seminal
work. The general set up consist of identical cohorts of durable goods,
whose quality is known only to potential sellers, enter the market over
time and a common result is that there exists a cyclical equilibrium
where all goods are traded within a finite number of periods after
entry. Market failure is reflected in the relationship between product
quality (and product reliability) and the length of waiting time before
trade as well as on the relationship between average price decline and
extent of trade of used goods. Based on a unique 9-month dataset
collected from Amazon's secondary market across multiple countries, and
multiple product categories we provide empirical evidence of trade
patterns and the presence of adverse selection. We show how used good
quality and product reliability affect resale turnaround times in an
electronic secondary market. We find some empirical evidence that is
consistent with theoretical predictions existing in the literature