Publication: How much Competition is a Secondary Market?
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2008
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Abstract
In this paper, we build a dynamic equilibrium model of durable goods oligopoly,
in which consumers face lumpy costs of transacting in the secondary markets and to
which they respond by buying and selling infrequently. We calibrate the model using
aggregate data from the U.S. automobile industry and measure transaction costs and
the substitutability between products. We use our estimates to directly quantify how
much competition active secondary markets represent for durable-goods producers.
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Keywords
Secondary Markets, Durables Goods, Oligopoly, Transaction Costs, Automobile Industry, Market Power