Turnover of Used Durables in a Stationary Equilibrium: Are Older Goods Traded More?
AbstractThis paper develops a dynamic model with transaction costs to determine the equilibrium resale pattern in a market for a durable good. The key result is that the probability of resale is nonmonotonic in the age of the good. Trade volume is relatively low in the very beginning and in the middle of a good's life. This result helps explain observed variations of resale rates across vintages for the U.S. market of used cars.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 110 (2002)
Issue (Month): 6 (December)
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